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It can be tempting to house the wealth conversation within the same mental compartment as that of your business or professional life, however by doing so we risk overlooking certain important steps in the wealth journey. Asking yourself whether others in your life should join the discussion widens the conversation, creates new ideas and leads to a more robust strategy.
WHO ELSE SHOULD BE PART OF THE CONVERSATION?
While ‘stakeholder’ is a bit of a clinical term, there are often a number of people that influence, contribute to, rely on, or have a degree of say in the wealth journey. Typically, this is a partner or spouse, but it could also be adult children, older parents, siblings, or as one client once rather philosophically put it, their ‘future self’.
And even if you want none, one, or all the members of your family around the table, in our experience asking clients “who else should be part of the conversation?” never fails to provoke thought.
A family matter
A persistent trend we have noticed over the years is for advisors to overlook the other stakeholders, and focus entirely on the one individual they see as the wealth’s sole creator. However in our experience, wealth creation is often borne out of a supportive family situation and elements of sacrifice on both sides. It is here that bias around diversity rears its head – statistics about the gender make-up of the UK High Net Worth population (cited by a 2018 study as being c. 85% male) are in our view unhelpful. Actually, the UK wealth-creating demographic is changing. For example, female HNW individuals in the UK under the age of 40 account for around double the proportion of male HNW individuals of the same age. Anecdotally, around 90% of our clients refer to it as the ‘family wealth’.
Unequal pay and diversity imbalances within senior leadership amongst large global banks can often be a turn off for female HNW individuals, suggesting that banks are ill equipped to cater to future client needs. Poor diversity when it comes to members of a team after all, generally leads to a lack of diversity of thought and a culture of groupthink. To take gender as an example again, even amongst family offices and independent wealth managers, women account for only 9% of CEOs according to a study by UBS and Campden Wealth.
Advisors focusing entirely on the ‘wealth creating’ spouse is not only incredibly limiting, but one which we feel is detrimental to creating a beneficial long-term wealth strategy.
Creating significant wealth can evoke many complex emotions, and it can often be easier to simply avoid the subject – even with those closest to us.
Creating significant wealth can evoke many complex emotions, and it can often be easier to simply avoid the subject – even with those closest to us. Creating an environment of open discussion, and bringing insight into how other individuals, couples and families face similar situations is often illuminating and tangibly beneficial.
Ensuring that the right people are at the table leads to useful discussion, exploration of competing views, and healthy challenge. It’s not uncommon for things to come up in conversation which have never been discussed before in the marriage (and before you ask, no we don’t moonlight as couples therapists…)
From the boardroom to the living room
Before the pandemic it was relatively typical for wealth managers to meet only the ‘wealth creating’ spouse, and for the meeting to take place at theirs or the advisor’s office. The wealth conversation tended to be compartmentalised by the client within the realms of ‘business’, the discussion heavily influenced by the logical left brain.
Lockdown parachuted advisors – virtually, we might add – into their clients’ living rooms. Fascinatingly and paradoxically, many advisors and clients alike found that this new environment fostered deeper conversations and closer personal connection than they had ever experienced during their in-person meetings. It also afforded clients the opportunity to introduce their spouse and/or other family members, and to bring them into the conversation in a more natural and organic way.
With the introduction of hybrid working and people returning to working in the office, it’s rare for a busy executive or business leader to spend their time at the office on personal matters such as their wealth. Typically, they will prioritise their team and professional duties, leaving the wealth conversation exactly where it has always belonged: in the home.
Have they asked it?
Before you meet with a wealth advisor, it is worth taking a mental note about whether they have asked that all important question: should anyone else be part of the conversation?
It’s something we at Six Degrees will always ask, and whether the answer is your partner, spouse, adult children, your tax advisor, your dog, or just you for the time being, we have no doubt that our ensuing conversation will be richer as a result.
This blog is for information purposes and does not constitute financial advice, which should be based on your individual circumstances. The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
