Ethical Financial Planning for Prosperity and Peace

What would a proper financial planning process look like if the only motive was to help the client on their psychological journey?

Human psychological development generally refers to the changes in cognitive, emotional, and social abilities and behaviour that occur throughout life. It is often divided into several stages, including:

1. Infancy (birth to 2 years)
2. Early Childhood (2 to 6 years)
3. Middle Childhood (6 to 11 years)
4. Adolescence (11 to 18 years)
5. Early Adulthood (18 to 40 years)
6. Middle Adulthood (40 to 65 years)
7. Late Adulthood (65 years and beyond)

Each stage is characterised by different milestones and challenges, such as learning to walk and talk, developing a sense of self, forming social relationships, navigating romantic relationships and establishing an identity, coping with ageing, and considering one’s legacy.

The Ethical Financial Planning Process:

1. Establish the client’s favourite future.

2. Add price tags to create a lifetime liability forecast.

3. Do an asset audit of tangible and intangible assets (a broader fact find than you may be familiar with). You might like to take the free 5-minute assets audit from London Business School: It’s fun!

Diagnostic – The 100-Year Life (100yearlife.com)

4. Identify productive assets to create wealth, vitality assets to increase client longevity, and transformational assets to reduce risk.

5. Design an asset strategy to optimise returns for the required risk profile and tolerance.

6. Leverage entrepreneurial opportunities.

7. Create sustainable livelihoods and financial assets.

8. Drop P&Ls and balance sheets into cash flow forecasts to create a lifetime asset forecast to match the lifetime liability forecast.

9. Explore ‘what-if’ scenarios on vitality assets, health life expectancy and life expectancy matching with asset preservation solutions.

The favourite future includes values and purpose (use of gifts). The aim is to help your client live a values-driven and purpose-driven life longer and better.

Your process will also consider the whole of the client. Stephen R. Covey (the 8th Habit) referred to this as the whole-person paradigm. Mind, body, heart, spirit. The favourite future is a journey of psychological development satisfying a hierarchy of basic needs and soul desires in phases over the client’s lifetime. [Richard Barrett’s new psychology of human well-being references Abraham Maslow’s hierarchy of needs.]

The journey is in four stages:

1. Suffering to wisdom: understanding that a plan for life is possible.

2. Wisdom to security: Physiological and safety needs met (body), relationship needs met (heart), self-esteem needs met (mind).

3. Security to freedom: Self-actualisation. Self-knowing and finding your tribe.

4. Freedom to Legacy: Self-transcendence. Collaborate to make the world better.

In commerce, intangible assets can be far more critical than tangible assets. For example, Google, Apple, and Microsoft have a market-to-book value approaching 50. That means that book value represents 2% of the market value. Also, according to ONS Wealth & Asset Survey, only 5% of British wealth is regulated investments. That’s why regulated investments form a small part of asset strategy in proper financial planning.

Proper planning is much bigger than regulated investment-selling financial planning.

Market-to-book value is the same with people. 

“The best investment you can make is in yourself… The more you learn, the more you earn… if you’ve got talents, no one can take them from you.” – Warren Buffet.

We use an evidence-based approach to create assets to optimise the return on productive assets. The 4P framework – Purpose, People, Planet, Profit – (also known as the Quadruple Bottom Line) is something I used in the banks to create market leaders.

See Firms of Endearment | Second Edition

We use it to create business plans for our clients, business owners, or employees.

The idea of using productive assets and leveraging entrepreneurial opportunities to create sustainable livelihood comes from the United Nations. It is the crucial component of Sustainable Development Goal #1 to End World Poverty. Part of the 2030 Agenda.

Poverty eradication | Department of Economic and Social Affairs (un.org)

“Priority actions on poverty eradication include improving access to sustainable livelihoods, entrepreneurial opportunities and productive resources;.”

The psychological journey moves the client from fear to love. The output is peacefulness, grace and contribution to the other sustainable development goals of the United Nations, according to your client’s unique gifts and talents.

Collectively… if we planned all clients in this way… we could save the planet and create world peace.

That’s what I mean when I say we are not ordinary financial planners – who use financial planning to sell investment products.

We are proper financial planners with excellent intentions. It’s a far bigger story.

We aim to contribute in our small way to end world poverty, save the planet, and bring about world peace.