Money and happiness are linked and using this as a model for financial planning is key, according to Chris Budd, founder of the Institute for Financial Wellbeing.
Speaking at the Personal Finance Society’s Duty Bound conference last week (November 2), Budd said recent research found that how happy a person is partly down to genetics.
He said: “[With happiness] 50 per cent is DNA, 10 per cent is circumstances and 40 per cent is intentional activity.
“If you increase your wealth by 50 per cent, your wellbeing will increase five times, but we also need to educate clients about their relationship to money, and that improves our intentional activity by 40 per cent.
“We need to improve that intentional activity through education. This is why financial wellbeing is where the puck is headed.”
Budd explained that for an adviser to understand how best to do this, they need to advise the person not the money.
“Don’t look after the fish, look after the water,” he said.
He urged advisers to consider building their financial coaching skills to allow them to communicate better with clients.
“Take notes in your meetings, record the meeting and listen back” he said.
“Listen back for the 'wow' moment.”
One technique he told advisers to try was to not speak in a client meeting for a total of five minutes as a way to encourage the client to open up more.
sonia.rach@ft.com
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