Once a client has begun to explain why they want to help others, it is tempting to move quickly towards the practical questions. Who should receive the money? How much should they receive? When should it be given? What is the most appropriate way of doing it?
Those questions matter, but they come later. Before we can sensibly think about the mechanics, we need to understand what the client means by helping someone in the first place.
A client might say that they want to help their children. On the surface, that sounds reasonably clear. In reality, it could describe a number of quite different ambitions. They might want to help with housing, give their children greater financial security, support grandchildren through education, provide assistance during a difficult period, or simply pass on some of their wealth because they no longer believe they need it themselves.
The distinction matters because the recipient of money and the purpose of the money are not the same thing.
If a client wants to give £100,000 to a daughter, we know something about the proposed transaction, but very little about the objective. Is the intention to enable her to buy a property, reduce financial pressure, compensate for difficulties she has experienced, provide greater equality with a sibling who has already received assistance, or simply make her life easier? Each might lead to the same transfer of money, but they arise from very different circumstances.
There is also a more difficult question lurking beneath many of these conversations: what does good help actually look like?
Giving somebody everything we can afford to give them is not necessarily the same as helping them. Parents and grandparents often wrestle with this. They want family wealth to create opportunity and security, but may be uncomfortable if it removes independence, responsibility or incentive. The issue is therefore not necessarily how much can be given, but what the client wants the money to achieve and what consequences might follow from giving it.
This becomes particularly important when there is more than one person involved.
Families are rarely financially symmetrical. One child may be considerably wealthier than another. One may have received substantial assistance already. Another may have health problems, caring responsibilities or children of their own who require additional support. Circumstances change, sometimes significantly, over the course of a family’s life.
This creates a distinction between equality and fairness that financial planning cannot simply solve with arithmetic.
Dividing wealth equally may be entirely consistent with a client’s values. In another family, providing different levels of support may better reflect what the client is actually trying to accomplish. Neither approach is inherently right. What matters is that the decision is conscious rather than an accidental consequence of moving too quickly to the financial solution.
The same thinking applies beyond the family. Someone who wants to support a charity, community or wider cause may be motivated by personal experience, gratitude, religious belief, social responsibility or a desire to see something changed during their lifetime. Again, knowing who will receive the money does not necessarily tell us what the client hopes their money will achieve.
There is another complication. Helping one person rarely affects only that person.
A substantial gift to one child may influence relationships with their siblings. Support for grandchildren can raise questions about the position of their parents. Money given away during a client’s lifetime may affect their own future security. Philanthropic ambitions may sit alongside, or occasionally conflict with, expectations within the family.
Seen in that context, helping others is considerably broader than a discussion about gifts, inheritance or tax planning. It forms part of understanding what the client wants their wealth to do, both for themselves and for the people and causes that matter to them.
That is why I think the order of the conversation matters.
We first need to understand why the client wants to help. We can then explore who they want to help and, importantly, what they hope that help will enable or change. Only when that picture is reasonably clear does it make sense to consider how much, when, affordability, taxation and the appropriate structures.
Financial planners are naturally drawn towards things that can be quantified. But the number is often one of the least interesting parts of the initial conversation.
£100,000 tells us the value of a gift. It tells us almost nothing about its purpose.
Understanding the difference is where the planning starts.