Defining the Higher Purpose of Money

02.18.2016

A central truth of American society is that our culture programs us to compete against an ideal. Whether it’s a favorite politician’s poll standings, a salary, a golf or SAT score, a credit rating, a cholesterol count or that pie-in-the-sky “magic number” we use to measure our financial progress. Whatever the number might be—once we attain it—we believe that success, and happiness, will follow.

What if I suggest a different way to measure success?

This method has nothing to do with measuring progress against an ideal scorecard or magic number. It focuses on the meaning of our lives and how we define happiness. Every scorecard on the planet is an attempt to target these things through hypothetical correlations. If I win the game, then I’ll be happy. If I make a high enough SAT score, then I’ll be happy. And so on. These theoretical correlations are supposed to guide us in establishing benchmarks for arriving at success.

Money is simply the vehicle we use to arrive at the goals we associate with happiness. The implication is that we, as financial mentors, should encourage our clients to invest a great deal more time examining the meaning of their lives as it relates to what purposes they want their wealth to serve and what those purposes mean to them personally. From that exercise, we may be able to show investors how to view money as a tool for accomplishing their goals and dreams. I call this the “higher purpose” of money. It may be expressed as early retirement, for example, but the meaning may be financial independence in order to volunteer at an orphanage in Colombia. When we relate financial goals to our clients life’s meaning, we begin to see our clients’ financial goals through the prism of how they view the world—and allocate their wealth by its purpose.

Once these self-actualizing goals are defined and their underlying purpose is linked to that definition, a radically new allocation strategy appears. One that is organically different from the questionnaire-driven allocations so prevalent in our industry and so completely essential to automated investing. Understanding what is truly important to our clients individually—and why that is so—is a far better basis for constructing the customized portfolio to get them there.

Counseling our clients based on their life goals and the higher purpose their money represents is a more personal and far superior context for making portfolio allocation decisions. Not only do I believe this method to be a more reliable guidepost for building portfolios, I also think it contributes more to building lasting client relationships than using a one-size-fits-all model derived from someone else’s idea of happiness.  

The opinions referenced in this material are intended for educational purposes only. These opinions should not be construed as recommendations, but as illustrations of broader themes. Forward-looking statements based on past performance are not guarantees of future results. Investment involves risks, uncertainties and assumptions based on changing market or economic conditions. Actual results may differ substantially from the opinions expressed. Neither Provasi Capital Partners LP nor any of its affiliates provide any tax, legal or specific investment advice. Investors should always seek the advice of their tax, legal and/or financial advisors regarding their specific situation.

Frank Muller

As CEO of Provasi Capital Partners, Frank Muller brings nearly 30 years of experience in building and managing multi-channel distribution services. Frank has been a featured contributor in numerous industry publications, bringing his unique insights and perspectives to relevant issues impacting financial advisors and their clients.

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Frank Muller
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