C h a p t e r
9
What does money represent to your clients? What tangibles and intangibles do they hope to purchase with their assets? We will address the specifics of what today’s clients say they want their money to buy.
Their “shopping list” is equally filled with intangibles that they see af- fecting their quality of life and tangible items that most advisors are accustomed to and comfortable talking about. In one sense, much of what the financial life planning discussion is about for the advisor is expanding the conversation from the tangible product to the intan- gible product. In this chapter we will survey the following:
• Why people want to be millionaires
• How money or lack thereof affects major life decisions
• What matters to the wealthy
• What matters to the achiever
study, it is not because they consider wealth to be the key measure of success in life. On the whole, people are measuring their success in life more on the quality of their personal relationships than on the quality of their possessions. Americans know what money can buy and are aware of its limits as well.
According to the study shown in Figure 9.1, Americans value self- fulfillment through family, friends, work, education, and religion more than they do from money. At the same time, these individuals understand the link between having money and being able to pursue the things they say are more important than money. For example, the respondents believe helping others is a greater measure of a suc-
FIGURE 9.1 How to Measure a Successful Life Good relationship
with your children 94%
Good friends 87%
Helping other people who are in need 87%
Becoming well educated 82%
Good marriage 81%
Interesting job 79%
Strong religious faith 74%
Living a long time 49%
Earning a lot of money 27%
Seeing a lot of the world 26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
■% answering
“absolutely necessary”
Source: AARP/Modern Maturity Survey.
cessful life than earning a lot of money, but the connection between the two is well understood. Having money can put you in a better po- sition to do the very thing by which you say you measure success (helping others).
It makes for an interesting mental exercise to view the items Americans say they use to measure a successful life and then ask your- self, “Does having money help or accelerate the pursuit of this goal?”
You wouldn’t have to earn a lot of money to be able to pursue good relationships with your children, spouse, and friends. Nor do you need to be wealthy to have strong religious faith or even to put your- self in a position to help others who have less. Nor will having a lot of money ensure that you will live a long life.
But read down this list and assess which goals are more accessi- ble or can be accelerated with prosperity and you get a different per- spective on why money is so critical to having a successful life to the average American—even if they refuse to put it in those terms. Some people feel that their relationships could be enhanced with the time and freedom to enhance them. These people harbor the hope that one day their money can buy them that time and freedom. There is no denying that earning a lot of money can afford you the ability to help others, get well educated, and see a lot of the world. Some peo- ple who do not find their work interesting would see a link between earning a lot of money and having an interesting job. Others, seeing the prospects for superior health care, would equate living a long time with earning a lot of money.
The bottom line is this, although Americans say they do not measure success by earnings, they do understand that having money accelerates the possibility of having the things that they do value. In every age group at least 40 to 50 percent said that money was some- what important to being successful. It is not about having money for money’s sake, it is about having money to attend to matters that they feel are important. The top reasons for having money include:
• Being able to provide for family (74 percent rate this as an ex- tremely important reason for having money). This is the great- est concern of those with children under age 18.
• Getting good medical attention when sick (68 percent). This is more of an issue with women than men.
• Staying healthy (64 percent). This is most important to the WWII generation.
• Being able to help family and friends (50 percent)
9 / The Meaning of Money 93
• Being able to have more free time (34 percent)
• Being able to contribute to worthy causes (27 percent)
• Having more things to enjoy (18 percent)
• Being able to travel (18 percent)
From these responses a portrait begins to emerge that indicates what the intangible product mix is that people hope to have the money to buy. Their concerns are family, freedom, health, and the opportunity for charity. Meanwhile, what products are most financial service firms busily touting? Retirement by age x. If our conversation with clients centered around family and health concerns, freedom to pursue the ideal mix of work and leisure, and how to leave a legacy through charitable effort and giving, we would quickly establish a lifeline between asset management and the soul of the client. The time has come for the financial advice industry to move beyond help- ing people acquire money for the sake of acquiring money to help- ing people first establish why they want the money and then going about the business of acquiring and managing those assets. This is fi- nancial life planning in a nutshell.