Financial planning naturally draws us towards numbers. Assets, liabilities, pensions, expenditure, tax and cash flow are measurable, and much of our technology and regulatory process is designed to capture them efficiently. Yet behind almost every meaningful financial decision sits a group of people. Money is earned, spent, protected, gifted and ultimately inherited within the context of relationships.
That is why I increasingly believe that one of the first things we should understand is not the money, but the family around it.
A conventional fact-find will normally tell us whether a client is married, whether there are children and perhaps whether anybody is financially dependent upon them. It may tell us who the beneficiaries of a pension or life policy are, whether there are attorneys under a Lasting Power of Attorney and who the executors of a Will might be. The information may therefore exist, but it is often scattered through different parts of the file.
We have collected the facts without necessarily seeing the family.
Making the family visible
A genogram is essentially a visual representation of a family and the relationships between its members. It looks superficially like a family tree, but for financial planning it can do considerably more.
Its great advantage is remarkably simple: everyone can see the same picture.
Instead of the adviser trying to carry a complicated family structure in their head, or another professional attempting to reconstruct it from pages of meeting notes, the important relationships can be seen together. Parents, partners, former partners where relevant, children, stepchildren and subsequent generations can be placed in context. Names and dates of birth add practical detail. Household connections, attorneys, executors, trustees and beneficiaries can be identified where useful.
The purpose is not to produce an attractive diagram. It is to create a common picture of the family that can support the planning that follows.
That becomes particularly useful when families are complicated. Blended families, previous relationships, elderly parents, adult children still requiring support and different generations living in separate households are difficult to appreciate from a conventional list of names. Put them on one page and the position can become much clearer.
Following the money through the family
Once the people and relationships are visible, we can begin to add the connections that matter financially.
Who depends upon whom? Who is currently receiving financial support? Is that support regular, occasional or intended for a particular purpose? Is the client helping children through education or early adulthood? Are elderly parents likely to need assistance? Are there family members who are not strictly financially dependent but nevertheless rely heavily upon the client around money?
These are not merely soft facts. They can materially affect financial planning.
A particularly useful question is: what happens to this family if the client's money stops flowing?
Death is the obvious possibility, but incapacity, illness, retirement, business failure or another major change could have a similar effect. Looking at the family as a connected system helps us see who could be affected before we start designing solutions.
Protection planning consequently becomes more than calculating a theoretical capital shortfall. Estate planning becomes more than calculating inheritance tax. Retirement planning cannot necessarily be separated from the support being provided to other generations. Lifetime gifting has to be considered alongside both the recipient's needs and the client's continuing security.
The Family Map does not have to answer all these questions. Its job is to make sure we can see the people to whom those questions relate.
The family may extend beyond the UK
There is another dimension that is becoming increasingly difficult to ignore.
Families do not necessarily remain within one jurisdiction.
A client may be UK based while a child lives abroad. A beneficiary may have another nationality or citizenship. A member of the family may have moved country, retained connections elsewhere or have a domicile that needs further consideration. Assets and family members can increasingly sit across different jurisdictions even where the client initially appears entirely UK based.
That matters because an overseas connection can affect far more than tax.
Succession, ownership, estate planning and the legal treatment of familiar planning arrangements can potentially be affected once another jurisdiction becomes relevant. The financial planner does not need to turn a family genogram into an international legal analysis, but we do need to recognise when another country has entered the picture.
I therefore think relevant overseas connections belong on the Family Map.
That does not mean repeatedly labelling everyone as UK resident, UK domiciled and a British citizen. In a predominantly UK family that would simply create noise. Instead, the map can work by exception. Where a relevant non-UK connection exists, record the country and the nature of the connection, such as residence, domicile or nationality/citizenship.
The significance is not that a label such as “France: residence” gives us an answer. It does something more fundamental.
It stops us forgetting to ask the question.
Where necessary, that question can then lead to proper investigation and specialist legal or tax advice before recommendations are implemented.
Not everything belongs on the map
The temptation with any visual model is to keep adding information until the model finally collapses under its own weight.
A useful Family Map therefore needs discipline.
It does not need every fact we know about every relative. Nor should it attempt to perform the work of the rest of the financial planning process. Detailed aspirations, capital requirements, affordability, lifetime gifting decisions and future spending belong elsewhere.
The map should capture what is necessary to understand the family around the client: who the relevant people are, their relationship to one another, the important connections between them, significant dependencies and the circumstances that may materially affect the planning.
Some matters are better recorded in supporting notes. Inheritance, for example, needs careful language. A client's confirmed intentions are very different from another family member's expected inheritance, which in turn is different from an uncertain or disputed position. Trying to represent every nuance on the face of the diagram would defeat the object of having a visual model.
The map should reveal complexity, not create it.
From fact-finding to understanding
I do not think there is anything particularly revolutionary about collecting this information. Good financial planners have always wanted to understand their clients' families.
What interests me is whether how we organise the information changes how well we think about it.
A traditional fact-find might contain every fact needed to establish that a client has three children, supports two of them financially, has an elderly parent who may eventually need care, expects an inheritance and has a child living overseas.
But reading those facts separately is different from seeing them as one interconnected picture.
Once they are mapped, the questions become harder to avoid.
Who relies on the client today? Who might rely on the client tomorrow? Who would be affected if the client's circumstances changed? Does the protection planning reflect those dependencies? Do the estate planning arrangements reflect the actual family? Is money already moving between generations? Is an apparently straightforward recommendation complicated by somebody's overseas position? And are there other advisers who ought to be involved?
That is where I think the genogram becomes genuinely useful to financial planning.
It creates a shared picture from which the client, financial planner and, where appropriate, other professional advisers can work.
The financial plan will eventually involve pensions, investments, tax, cash-flow modelling, protection and estate planning. But those are mechanisms. Their purpose is ultimately to help people.
Perhaps the sensible place to begin is therefore not with “What do you own?”
It is with “Who is around you?”