Why Financial Planning Should Start With People, Not Money
Financial planning has an understandable tendency to begin with money. We establish what a client earns, what they own and owe, the pensions and investments they have accumulated, and the financial arrangements already in place. All of that information is necessary, but I increasingly question whether it is the right place to start.
Money is, after all, the thing we are planning with rather than the purpose of the planning itself. For many clients, a significant part of that purpose lies with the people around them. Their own financial security matters enormously, but so too does the security of a spouse or partner, the support they may wish to provide to children and grandchildren, responsibilities towards ageing parents, and sometimes the needs of other people who depend upon them.
If we want to understand the purpose of someone's money, it therefore seems sensible to begin by understanding their family.
Seeing the family as a whole
Most conventional fact-finds already gather a reasonable amount of family information. They record a spouse or partner, children and dependants, and may capture other relationships where they are immediately relevant. The issue is not necessarily that the information is absent. It is that it is often fragmented.
A visual Family Map creates a rather different perspective. The first map within my developing 6-Map Discovery approach uses a genogram-style structure to bring together the family, households, relationships and areas of dependency, alongside the relevant professional advisers surrounding the client. The intention is to create a picture of the people around whom the financial plan is ultimately being constructed. The 6-Map Discovery Manual describes the resulting output as showing the family structure, dependency and the routes through which wealth may move now or in the future.
That visual distinction matters. Information considered individually can answer individual questions. Putting it together can encourage us to ask how the different parts interact.
An adult child, for example, may no longer meet the technical definition of a dependant but may still receive substantial financial support. Parents may have helped with education or a house deposit, be contributing towards grandchildren, or have made promises about future assistance. At the other end of the family, an ageing parent may become increasingly dependent on the client. Health or vulnerability anywhere within the wider family can materially change both the responsibilities a client feels and the demands eventually placed upon their capital.
The purpose is not to speculate about every possible family event. It is to make sure we have looked at the family as a whole rather than considered each person separately.
Following the money through the family
Once the family is visible, the movement of money between generations becomes easier to understand.
We can see where financial support is already being provided, where future help may be contemplated and where commitments have perhaps been made informally but have never found their way into the financial plan. We can also begin to consider how today's planning decisions could affect different members of the family later.
This becomes particularly interesting when clients talk about fairness.
Parents often want to treat their children fairly, but fairness and equality are not necessarily the same thing. One child may need more help than another because their circumstances are different. Another may already have received significant assistance. What matters to the parents may therefore be equitable treatment over time rather than an identical cheque for each child on the same day.
Keeping a clear picture of previous gifts and support can help enormously with that conversation. It can also expose the importance of communication. Different treatment can be perfectly reasonable while still creating resentment if nobody understands why it happened.
There is, I think, an appropriate role for the adviser here. We should encourage families to have these conversations where they would be helpful, without assuming that the adviser needs to become directly involved in every family discussion or take on the role of family mediator.
A visual method can deepen the advice
The Family Map is not intended simply to make a fact-find look more attractive. Its real value is that it changes the way the information can be considered.
For the adviser, it provides a single reference point from which to think about dependency, lifetime gifting, protection, estate planning, succession and the potential movement of wealth through generations. For the client, it provides an opportunity to see their own position differently.
Sometimes that may simply confirm that we have understood the family correctly. More usefully, it may prompt something that had not previously been discussed: a promise made to a child, concern about a parent's health, previous gifts that ought to be taken into account when considering fairness, or a family conversation that has been repeatedly postponed.
That is where I think visual planning becomes particularly useful. Its value is not merely in communicating the advice more clearly after we have formulated it. The visual methodology can help us formulate better advice in the first place.
The family does not stand still
None of this should be treated as a one-off discovery exercise. Families evolve continuously. Relationships change, children establish their own households, grandchildren arrive, health changes, parents age, businesses pass between generations and money moves around the family.
The Family Map should therefore evolve with them.
Rather than beginning every annual review with investments or portfolio performance, there is considerable value in putting the previous family picture in front of the client and simply exploring what has changed. That conversation may tell us far more about the continued suitability of the financial plan than an immediate discussion about markets.
This is ultimately why I think there is value in placing the Family Map at the beginning of discovery.
It does not replace the detailed fact-find, and it does not make the financial information any less important. What it does is establish the context in which that information should subsequently be understood.
If financial planning is intended to help people use their money well, then understanding those people, and the people who matter to them, seems a sensible place to begin.