Financial wellbeing: A wishy-washy platitude or a sea change for financial planning?

If you have been a financial planner for many years, or worked in another role within UK financial services, the concept of “financial wellbeing” may be fairly new to you. You might even wave it away as a wishy-washy phrase that holds little water.

However, the culture of financial planning is undergoing a sea change, with the concept of financial wellbeing at the ship’s helm. Gone are the days of transactional client relationships and profit-focused planning; now, clients’ financial wellbeing must be firmly rooted at the heart of what we do.

So, what exactly is financial wellbeing and how can IFAs embrace it? Keep reading to find out.

“Financial wellbeing” combines freedom, understanding, and peace of mind

Author and financial planner, Chris Budd, breaks down five key elements that make up financial wellbeing:

  1. A path to clear objectives
  2. Control of daily finances
  3. The ability to cope with financial shock
  4. Financial options in life
  5. Security for those we leave behind.

Helping your clients towards financial wellbeing means decentring the idea of accumulating wealth for wealth’s sake, replacing this ethos with a more holistic approach. When pursuing financial wellbeing, your clients’ goals, happiness, and peace of mind become the “why” behind their wealth plan.

The NHS says that money and mental health are inextricably linked

The concept of financial wellbeing goes beyond the “echo chamber” of financial services.

Indeed, the NHS reminds us that being stressed about money over a long period of time can lead to mental illness symptoms like anxiety, depression, sleep problems, and low mood. This is especially poignant amid the cost of living crisis.

Likewise, having a pre-existing mental illness can exacerbate, or even cause, financial problems. For instance, those with low impulse control may more easily overspend or rack up debt, even if they earn a significant amount.

These two examples of cause and effect can become a cycle that is very hard for some people to break. Not everyone is honest and open about their struggles with mental illness, either, so it’s important to be vigilant about checking in with your clients and supporting them in any way you can, even if they haven’t told you openly that they are finding things difficult.

The Financial Conduct Authority insists that client understanding should be at the forefront of financial planning

Along with the NHS and mental health charities emphasising the importance of financial wellbeing, the Financial Conduct Authority (FCA) has already begun making changes to ensure financial services is taking the issue seriously too.

You’ll remember that in July 2023, the FCA introduced its new Consumer Duty. Under these new rules, it requires firms to “consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.”

While you might recall the introduction of Consumer Duty as an onslaught of lengthy paperwork and challenging regulatory demands, particularly if you run a small firm, it’s crucial to be mindful of its core purpose: financial wellbeing.

Empowering and enabling financial planners to be clear, put clients’ wellbeing first, and makes greater effort to recognise vulnerabilities, Consumer Duty guidelines can actually help IFAs to form a more holistic approach to working with clients.

3 easy ways to prioritise your clients’ financial wellbeing

Here are three simple ways to put your understanding of, and commitment to, financial wellbeing into practice.

1. Begin annual reviews with a simple question: “How are you?”

In a professional setting, many ask, “How are you?” as a box-ticking exercise. You might hear the words come out of your mouth as you’re holding the door open for a client, and they may issue the standard reply: “Fine, thanks”.

To avoid this all-important question being thrown away at the beginning of the conversation, try asking with intention and purpose. Wait for your client to sit down and become comfortable before asking how they are – you might find you receive a more honest answer.

2. Check in with previously stated goals and intentions

If you have known a specific client for many years now, you could feel that you have them figured out. But you never know how a person’s life circumstances, goals, and priorities might shift over time.

That’s why you might benefit from checking in with previously stated intentions and goals. For instance, if your client said they wanted to gift a chunk of capital to their children 12 months ago, speak to them in their next review about whether they did so, and if not, find out more about why this wasn’t achieved.

All this could foster a sense of trust between you and your client, creating a rapport that ultimately serves to improve their financial wellbeing.

3. Prioritise easing client stress where possible

Life throws its twists and turns at us all, and your clients are no exception. They’re likely to experience all kinds of difficult life events during their relationship with you, such as bereavement, divorce, or even the often-tricky transition into retirement.

While you’re likely focused on your clients’ long-term financial freedom and peace of mind, make sure you’re paying equal attention to their immediate stressors. For instance, if a client is getting divorced, they could need to free up funds to pay a legal professional. Responding to, and assisting with, these seemingly simple issues could take a huge weight off your clients’ shoulders.

Talk to us and learn about becoming part of the Corbel Partners community

We offer a range of options to IFAs who are looking for the opportunity to spend more time with clients, feel supported in their work, and prioritise positive outcomes.

Email hello@corbelpartners.co.uk or call 01925 637891 to learn more.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The contents in this article were correct on 21/01/2025

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