Australians trust their doctors with intimate details of their physical and mental health and now wealth experts are urging a similar stance towards financial advisers.
Leading Advice managing director Katrina Haskew believes incorporating mental, physical and lifestyle factors is integral to a successful financial strategy.
“New clients often think we’re only there to discuss how many zeros they have in their bank accounts, or what hot new stocks they should be investing in,” Ms Haskew said. “They can become quite surprised when we ask the last time they visited their dentist, how much they typically sleep each night, or (about) their mental health.”
Ms Haskew believes health impacts a client’s finances in numerous ways.
“First, your health can determine which financial strategies can actually be followed,” she said. “There’s no point formulating an aggressive expansion strategy for a business owner who is burnt out, not sleeping and slowly developing a heart condition.”
Next, health dictates insurance options.
“Knowing your medical risk factors and also lifestyle goals will help to inform those all-important wealth protection strategies,” she said. “If you value providing for family above all else, you will want income protection. If you enjoy bungee jumping … life insurance is a must.”
A longer life requires a bigger nest egg, so an understanding of pre-existing diseases, conditions and other factors helps in setting targets.
Finally, high costs are associated with some aspects of health.
“Being physically and mentally healthy often equates to healthier finances,” Ms Haskew said, adding that quitting smoking could save someone thousands each year, as well as reducing insurance premiums, while being healthier can mean spending less on medication.
Hannah Moreno was building her PR business Third Hemisphere, when she separated from her husband. The blow in her personal life understandably affected her business focus.
“I had just started seeing a financial planner and spent our first few months cancelling our appointments,” Ms Moreno said. “When I finally returned his multiple calls, I gave in and told him the truth. The separation had left me completely exhausted. I’d started fantasising about throwing in the towel with the business and had no energy left over to care about building my wealth.”
This situation was nothing new for the planner.
“Far from being put off at my over-share, he simply changed our immediate planning goals from a ‘growth’ strategy to a ‘survival’ strategy,” Ms Moreno said. “He assured me he’d helped dozens of clients navigate tough personal situations, and that his financial strategies were often largely determined by their mental and physical wellbeing.
“He calculated I could comfortably pay my bills if I halved my newer clients’ retainers for three months, and did half the work. This was long enough to finalise my financial settlement, and move into a new home. It kept the business afloat while I attended to my personal life.”
Two years later, Ms Moreno is in a better headspace and thriving.
“We’ve switched back to ‘growth’ mode, have begun an aggressive expansion strategy and are finalising an exciting strategic partnership to add listed companies to our growing portfolio,” she said.
“So even though that initial conversation felt quite personal and raw at the time, it was a complete financial lifesaver in the end.”
*This story was first published in the Daily Telegraph: Health and wealth go hand-in-hand