We are always looking at how discretionary fund managers (DFMs) support financial advisers and clients in unique and different ways. At LGT Vestra we spotted that they were doing something interesting through a partnership with The School of Life and thought we would take a closer look.
David Scott, Chairman at LGT Vestra LLP explains;
Everyone has different motivations and priorities in life, all of which will have a bearing on their financial decisions. In a world where there is a tendency for the wealth management industry to focus on financial and technical facts, we, at LGT Vestra, believe that understanding clients’ non-financial values, thoughts and concerns are equally as important and should be at the forefront of clients’ discussions with wealth managers.
Understanding the client’s emotional and personal values will enable us to provide a better quality of overall advice in the structuring of their financial affairs. To gain this understanding, a wider and deeper range of questions need to be posed than is often the case. The answers to those questions need to be considered in a way which ensures that both the wealth manager and client are able to apply proper thought to the broad range of issues which can impact the management of their family and financial affairs.
Our partnership with The School of Life has led to the creation of ‘A Portfolio of Thoughts’, a series of philosophical essays which explore 12 important life areas. The School of Life is dedicated to exploring life’s big questions and we see this as a conduit to developing a deeper understanding of the issues that drive attitudes to wealth.
Written by leading philosophers and authors, ‘A Portfolio of Thoughts’ provides a stimulating collection of essays as we seek to explore the relationship between philosophy and business.
We believe that, along with our core principle of providing advice in a transparent and impartial manner, our partnership with The School of Life will help us and many of our clients reach a better understanding of their future wealth planning needs in order to better enjoy their wealth.
The 12 areas explored are:
Alain de Botton, Founder of the School of Life also said;
At first sight, philosophy and wealth management might seem worlds apart.
One is concerned with practical decisions about where, when and how to invest, made under competitive pressure, with imperfect knowledge but always with an eye to the bottom line. Philosophy on the other hand, seems preoccupied with fascinating, but non-urgent questions about the meaning of life and the nature of values, ruminating on the human condition with no particular end in sight.
However, I believe that there are some critical areas of intersection and that a wealth management firm can become stronger (which means not only more ethical, but also more fruitful and meaningful) by absorbing some of the lessons of philosophy in particular and culture more generally. There doesn’t have to be a divide between profit and value.
The end goal of all rational humans was first and most beautifully defined in the fourth century BC by the philosopher Aristotle as eudaimonia, a word commonly translated as ‘flourishing’ or ‘fulfilment’ as opposed to a narrower term like ‘happiness’.
Most businesses, outside of a tiny minority, are in fact connected through their activities to the goal of eudaimonia/ human flourishing. They might be selling sandwiches or airline tickets, or managing a client portfolio, but at the end of the day, they are aiming to satisfy and please those they serve.
Of course businesses don’t typically frame their concerns philosophically. They don’t use weird greek words; they simply say that their success depends on ‘understanding their clients’. But they are often not thinking deeply and broadly enough about human needs and are therefore flawed in their eventual understanding. The parameters of their investigations are too cut off from broader cultural, psychological and social scientific insights; their questions are wrongly framed.
So a characteristic wealth manager might ask, ‘How can I increase returns on portfolios by x% more than the competition, or by X% more than last year?’ rather than asking ‘What will actually help my client truly flourish in connection with money?’
That’s not to say that the purpose of a wealth management firm is not no keep your money safe and grow it year by year. But the full promise is much deeper: it is to help to promote a good life around money. For example, it might be that money is a source of difficult family dynamics, it may be that status is a deep (in not openly avowed) concern; it may be that there is a desire to do good in the world but there is a nagging uncertainty around how to reconcile idealism and realism.
Often it can seem that the pursuit of profits and the contemplation of value are certainly at odds, but they can and should overlap: a business is an idea of human satisfaction, put into practice. Profit should be the reward for recognising a hitherto untapped area of satisfaction.
These are the much richer, and more interesting possibilities for wealth management – and they are what we will begin exploring with this series of essays.
At DISCUS HQ, we have started reading our way through the essays, and you can access them here. Tell us your favourite in the space below!