North East Life - February 2008
Contributor : Jonathan Fry

When I was invited to contribute a personal finance column to the launch edition of North East Life I pondered the many live and topical financial issues that I might consider covering.

The slow down in the economy, the apparent decline in the property market, the nervousness in the banking and investment sector following the demise of Northern Rock, the anxiety over the value of personal and company pensions schemes - all would have made worthy subjects.

But on further reflection, and being mindful of my own approach to new clients who seek my advice, I believe that the first consideration when looking at financial planning - or wealth preservation, as I prefer it to be known - is to identify what are the personal goals of the person, partnership or company that I see before me.

There is perhaps a danger that the desire for money, for wealth can become so consuming - that we sacrifice our health, our relationships and the fundamental quality of our lifestyle. People have driven themselves to an early grave, seen the destruction of their families, won and lost massively and have even gone to jail - all in the name of making money.

While those are extreme cases, it is my experience that many investors who have the means and the motivation to seek the help of a financial adviser do so with one intention - to ensure that their investments grow by the largest amount possible for the level of risk they are prepared to take.

A seminar I attended recently in Zurich devoted to private banking and wealth preservation left me with a reinforced conviction that financial planning "is not just about the money". Perhaps the most interesting speaker was an American consultant who advises organisations that manage the wealth of higher net worth individuals. His simple, but powerful conclusion was that for the vast majority of people, financial planning should begin, not with money, but the identification of what was important to us in our own lives. Once we have got the focus right, the money can be organised accordingly.

And what is important, surely, is not the quest for the most lucrative route to the continued expansion of our wealth, but about setting destinations - about deciding what kind of lifestyle we want for ourselves and our families. When we know what will make us happy we may be surprised to discover that it may not, in fact, be linked to making money.

So the first step to financial planning is to begin with the end in mind. Yes, we want to be financially secure, to provide for our families and to pay the least amount possible in taxes on our accumulated or inherited wealth. But if we want to enjoy a fairly simple retirement, walking the North East's fabulous countryside or coastline, having a nice meal out when we wish to and enjoying a decent holiday once or twice a year, we don't necessarily have to sacrifice what can be ours today in the race to achieve double the amount tomorrow.

The real danger is that we become busy fools, rushing after this or that without ever wondering why.

Increasingly, I am convinced of the need for individuals and families with money to invest to have a trusted, independent financial planner, as opposed to taking "advice" from those whose interests are in selling particular products. And my experience is that bringing together grandparents, parents and children to determine what is important to the family as a whole, in most cases will result in the desire for an on-going quality of life and enjoyment of wealth far outstripping the imperative to make ever more money.

Identify the desired destination and the journey will become so much more fulfilling and rewarding. To quote the stockmarket guru Warren Buffet, "it's the process not the proceeds".

© North East Life 2008