Financial planning quite rightly asks clients what they want their money to do for them. We talk about retirement, travel, financial independence, perhaps a second home or simply the reassurance of knowing that they will be all right. Yet for many clients, some of the most important things they want their money to achieve have very little to do with themselves.
They want to help their children buy a home. They may want to pay school or university fees for grandchildren, provide some financial security for someone who is struggling, or give money to a charity or cause that matters to them. Sometimes those intentions are quite specific. Often they are little more than a feeling that, having accumulated more than they are likely to need, they would like some of it to do some good.
That is where Map 3: Helping Others begins. (Map 3 - Helping Others — Navigating Finance | Financial Planning in Practice)
The temptation for a financial planner is to turn that conversation into a technical one rather quickly. How much can the client afford to give? What are the tax consequences? Should the gift be made outright or through a trust? What allowances or exemptions might be available?
Those questions matter, but I increasingly think they come too early.
Before working out how somebody should give money away, we need to understand why they want to give it away in the first place.
A client saying, “I’d like to give my daughter £100,000 towards a house” appears to have given us a fairly clear objective. In reality, we may still know very little.
Why £100,000? Why now? Is the objective to get her onto the housing ladder, reduce the size of her mortgage, allow her to live closer to the family, or give her the security that her parents did not have at the same age? Would a smaller amount achieve much of the same thing? If there are other children, what does this mean for them? Does the client regard equal treatment as important, or are they comfortable helping different children differently according to their circumstances?
Those are not peripheral questions. They are part of the planning conversation.
The gift is not necessarily the objective
This follows much of the thinking behind the Life Map. A stated financial objective can easily be mistaken for the underlying aspiration.
If a client wants to give a child £100,000, the £100,000 is not necessarily the objective. It may simply be the solution the client has arrived at before speaking to us.
The real objective might be security, opportunity, independence or perhaps the pleasure of seeing their children benefit from accumulated family wealth while the parents are still alive.
That distinction matters because circumstances change. Children form relationships, careers develop, grandchildren arrive and family circumstances evolve. A plan constructed entirely around a particular transaction can quickly become outdated. If we also understand what the client was trying to accomplish, we have a much better chance of adapting the planning without losing sight of its original purpose.
This is why the Map 3 process starts with the client's general attitude towards lifetime financial help and then develops a picture of who they might want to help, what for, why, approximately how much and approximately when. It deliberately puts the client's wishes before the tax discussion. Being able to give is not the same as wanting to give
There is another complication that financial planners need to recognise.
Cash-flow modelling may demonstrate quite convincingly that clients can afford to make a gift without threatening their own long-term security. That is extremely useful, but it does not necessarily settle the issue.
Sometimes clients remain uncomfortable.
Our instinct can be to respond to that discomfort with more numbers: another scenario, more stress-testing or a larger margin for error. But eventually we have to recognise that the model may already have answered the financial question. The unresolved issue may be something else entirely.
Perhaps the client spent decades accumulating the money and finds it psychologically difficult to relinquish control of it. Perhaps they inherited some of their wealth and feel differently about giving it away. Their own experience of money, inheritance or parental support may influence how they think about helping the next generation. Or perhaps they worry that giving too much too soon could undermine rather than encourage independence.
None of that makes the client irrational. Nor does demonstrating that a gift is affordable create an obligation to make it.
It simply means that sometimes the financial planner needs to stop answering the same financial question and listen for the question the client is actually struggling with.
Start with the family, not the solution
This is also why Helping Others sits after the Family Map and Life Map within the six-map approach. The wider process deliberately keeps the family lens open at Map 3, including financial support, education, security and philanthropy.
By this point we should have some understanding of who matters to the client and what the client wants from their own life. Helping other people does not sit outside those plans. It interacts with them.
Money given to children cannot also fund the client's retirement. Money retained to provide absolute financial security cannot simultaneously help a grandchild at the point when it might make the greatest difference. Supporting one child may create questions about another. Giving during life may also feel very different from leaving the same money behind eventually.
Those are the trade-offs that eventually need to meet the numbers.
Cash-flow modelling, taxation, trusts, estate planning and specialist advice all have their place. But they become much more useful once we understand what the client is actually trying to achieve.
That, for me, is the purpose of Map 3.
Before asking “How should we give the money?”, perhaps the better conversation starts with:
“What do you want your money to do for the people who matter to you?”
Only then do we really have something to plan for.