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Claire Phillips: Zen and the art of financial life planning

Claire PhillipsI have just visited Japan and while there I could not help but think about the concept of zen.

This is both something we are – our true nature expressing itself moment by moment – and something we do: a disciplined practice through which we can realise the joy of being.

It strikes me that financial planning combines these elements. The planning itself is the disciplined practice that will hopefully bring joy to clients. In his best-selling philosophical novel, Zen and the Art of Motorcycle Maintenance, Robert Pirsig’s protagonist Phaedrus talks about the concept of quality – that which makes something good.

Quality allows thinkers to perceive in terms of the subjective and objective, which is integral to financial planning. A planner takes facts such as how much a client earns, what savings, investments and pensions they have, and combines them with more subjective factors, such as attitude to risk and how they feel about creating a legacy.

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Quality is meant to steer towards a viable solution. The skill of the planner is to combine the above, come up with scenarios and test them rigorously, resulting in a plan – the viable solution.

Phaedrus also introduces the concept of gumption, which is what motivates an individual to perform a quality task. Here, gumption from clients comes in realising they would benefit from having a financial plan, contacting a planner, supplying the relevant data, and agreeing and sticking to the plan that has been created.

Gumption from planners comes in wanting to help clients, not just on a one-off, transactional basis but on their ongoing journey.

We are warned to be aware of gumption traps, which can drain an individual’s motivation and ability to perform quality work.

There are two main categories of trap. Firstly, setbacks that come from external circumstances. Secondly, hang-ups that come from the individuals themselves. Here, setbacks for clients could include falling ill or being made redundant, which might cause them to stop sticking to their financial plan. For a planner, it could be difficulties gathering accurate data from a provider in a timely manner, a change in legislation or increased regulation.

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Hang-ups for clients could include behavioural biases that lead to irrational decisions. And clients are not alone in having hang-ups or biases. I once worked with someone who would never recommend venture capital trusts or enterprise investment schemes, despite them being a perfectly legitimate and well-tested method of tax planning.

Another trap is anxiety, where nervousness forces one to commit errors that hinder the repair process or, in the context of this article, the financial planning process.

Phaedrus suggests the best way to avoid these errors is to work out anxieties separately from the repair process to achieve peace of mind.

The rise of behavioural and financial coaching by planners is helping clients address their anxieties and avoid errors, allowing them to gain peace of mind and the joy of being, with the plan the separate repair process.

Claire Phillips is partner at First Wealth



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