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The paradox of advice

14 February 2020

If you decide to engage a financial adviser, you might think that the decision would make you better off financially.

That’s not necessarily true.

I was chatting with some clients recently and had a weird realisation.

I realised that for many of my clients, engaging with me is likely to mean that they end up with less money over the long-run.

The reason for this is that I often encourage clients to spend their money. Or I point out that they can probably afford to generate less income over the course of their lives.

The goal shouldn’t be to end up with as much money as possible

If your goal is to accumulate as much financial wealth as possible, good on you. This probably isn’t the blog for you.

If your goal is to live a life in line with your values and priorities, then it probably pays to think about what “wealth” means to you.

For many people, their constraints aren’t financial in nature. The constraints come down to imagination, and answering the question: what type of life do you want to lead?

When I work with a lot of people, the most important part of the process isn’t the actual financial advice I provide them.

The most important part of the process is when I explain to them that they’ve already got enough money, or that if they keep doing what they’re doing, and they manage the risks they might be exposed to, they’ll be fine from a financial perspective. It gives people a tremendous sense of comfort and confidence.

And it leads to a much bigger question: what do you care about, and what do you want to want your life to be about?

That often results in spending money, or making less money. Because when most people think about it, their definition of a “wealthy life” is much broader than dying with a lot of money in the bank.


Tags

financial advice, financial planning, paradox, planning, priorities, values, wealth


About the author 

Sonnie Bailey

In his spare time, Sonnie likes telling people that he’s a former Olympic power walker, a lion tamer, or that he is an orthodontist. He is none of those things. In reality, Sonnie is a financial planner based in Christchurch. Through his business, Fairhaven Wealth (www.fairhavenwealth.co.nz), he provides independent, advice-only, fixed-fee financial planning services. Sonnie is a “recovering lawyer”: he has specialised in trusts and personal client work. He has also worked as a financial services lawyer for many years.

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