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For Wealth Management to be Worthwhile, It Must Include More Than Money

Money, Not Wealth

In my last post, we looked at the advisor / client relationship and considered what that actual purpose (“end”) of that relationship. While many might quickly point out that delivering investment performance as the primary goal of that relationship, yet when we look at reasons why people leave the advisory relationships, the vast majority of reasons are tied to issues of communication and not investment performance. This is an important signal that something else is at work.

To that end, we concluded in the prior post that people work with advisors to support the ultimate purpose of their wealth, namely the support of eudaimonia aka human flourishing.

Eudaimonia, is an old Greek term, often translated as human flourishing. Aristotle argues that eudaimonia is the purpose of life. Or as Philosopher Hannah Arendt noted, “the ultimate end of humans acts is eudaimonia, happiness in the sense of living well, which all men desire, all acts are but different means chose to arrive at it.”

Separating Wealth from Money

Instead, I’d like to examine where and how wealth intersects with flourishing. To begin down this path, it is important to separate the concept of wealth from money. Our language use of those terms is imprecise to our detriment. While wealth and money are most often used synonymously, there is a clear difference.

One’s holdings in currency, financial assets, real estate, and the like, can be represented in a monetary form. Money serves a balance sheet purpose – it enables us to take something we own and represent that in a simple way. In this simple fashion, money could best be thought of as a simple way of demonstrating property rights.

Intuitively, we sense something deeper in our definition of wealth. While wealth may be represented in the form of monetary assets, money’s presence alone is not guarantee of wealth. Instead, wealth is holistic concept that comprises multiple dimensions beyond just money. True wealth, in fact, might the closest term we have in modern dialogue that begins to encapsulate the classical sense of eudaimonia, or human flourishing, or well-being.

Money then is a resource then that is used in support of true wealth. This difference in meaning may seem like a minor nuance, but in fact is the foundation that any successful advisor-client relationship is built upon. If we can make this mental shift that money serves as an instrumental means towards attaining wealth, I believe we can begin to crack open the door of what purpose the advisor serves.

While the financial services industry is largely structured to provide products and services for the management and growth of someone’s monetary assets, this stops short of focusing on what the client wants, namely, to pursue eudaimonia, of which money will be an enabling tool in that pursuit.

Defining Wealth is Highly Pragmatic (Even Thought it feels squishy)

This may sound excessively philosophical as it does not feel as concrete as dollars and cents. This could not be further from the truth. In fact, this is the most pragmatic of discussions because it speaks to the reality of how you will actually choose to deploy your money. Alignment between you and your advisors on these critical issues of what flourishing is to you will then set the table to increase the likelihood of attaining your key goals because the real questions and issues are on the table.

Too often, advisors and clients talk past each other in their meetings. The advisor likely was drawn to this field of profession because of the cognitive stimulation and complexity of addressing the affairs of the wealthy. As such, client meetings can easily become a chance to “talk shop” around critical issues – water cooler discussions that are probably best reserved for similar professions able to converse in a similar language and at a similar depth as the professional.

Meanwhile, the client knows that careful stewardship of their assets is important, but this may limit the advisor meeting to a box checking exercise – like an annual physical, i.e., once it’s done and out of the way, one can get back to the real matters of living.

Instead, the two sides must learn how to enter a dialogue about the critical and core priorities of the client. The advisor must learn to ask, understand, and ultimately translate the client’s views into pragmatic terms of how the supportive resource (i.e., the money) is used. The client must do the work of time immortal, as the Delphic oracle highlighted, Know Thyself. Understanding one’s wealth in all its forms and your pursuit of flourishing, then brings a richer depth to dialogue to the advisor relationship.

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