In essence, it’s about direction and connection, says Dan Atkinson, head of Technical, Paradigm Norton Financial Planning
As financial planning professionals I believe that our purpose is to enable clients to live happy lives. We help them apply their money to that endeavour. Money in service of life. Or as we say at Paradigm Norton: Money matters but life matters more.
In our book club we are exploring this as we read The Geometry of Wealth by Brian Portnoy. We’ve not finished it yet so please, no spoilers! However, I’d like to share with you the 4Cs that he describes as being enduring sources of a joyful life.
Why is this relevant?
But first. Why is this important for paraplanners in how we serve clients?
Financial planning is sometimes described as being like a satnav. A route is calculated from A-B taking into account things like the traffic. As you travel along it updates when you take a wrong turn (because we always know best!) or traffic builds up and an alternative route would be better. However, a satnav needs to understand where to go and your preferences about paying tolls or congestion charges.
Financial planning is an ongoing activity adapting to changes in the client’s life and the world we live in. It needs to consider things like preferences to keep costs low, take more (or less) investment risk, or incorporate ESG or Impact in portfolios. However most importantly it needs to know where to head towards!
What are the 4Cs?
Each C draws on research that Brian Portnoy has read from a wide range of disciplines. I’ll set them out briefly to whet your appetite!
• Connection
We have a deep need to belong and identify with other people. Social relationships (friends, family, community) are highly correlated with happiness.
• Control
We want to be masters of our own destiny, to direct and define our lives. The ability to plan and react, even when it doesn’t go the way we hope, is a deep source of meaning. Joy often comes through adversity it seems.
• Competence
This means being good at something that is worthwhile. What we do for work isn’t just to pay the bills. What we do often defines us. We feel good if we can use our skills, with excellence, to have a positive impact on the world. Work becomes meaningful if we have to make an effort because we want to be good at it.
• Context
These three Cs don’t exist in a vacuum. Context acknowledges that we want to belong and serve something bigger than ourselves. This is not just about religion, but other purposes like ending segregation (Dr Martin Luther King). To an extent it motivates how the other Cs play out in our life.
Really, Dan, what has this got to do with the work we do!
One of the most common activities we help clients with is retirement. It’s longed for by many and dreaded by others. Whilst some clients gradually reduce their days at work down to zero, many will have a sudden end to one of the biggest parts of their life.
• They lose connection with a significant part of their social network. We often spend more time with our colleagues than our families. We may well have built up friendships in our professional networks too.
• They might have gained full control over their time, but their financial future is now based on what they own (and that will be depleting for most) rather than what they earn.
• They stop doing the thing that they were really good at. Often their identity might be wrapped up tightly with their job title, seniority, or professional designations. The C of competency potentially reduces.
• If their context was also bound up in what they did for work their happiness could be severely impacted.
As we help these clients in the financial planning leading up to retirement there is an opportunity to address these. Wouldn’t it be great if we helped them consider how might they use their time and resources to establish a new source of competency. This in turn might increase connection. Getting clearer on context means that as we build the financial plan (applying their financial resources) we can help them enjoy control when they stop work.
Imagine how great a retirement that would be!
[Main image: jungwoo-hong-cYUMaCqMYvI-unsplash]
