Fortnightly financial #35 Chris Budd

Please can you tell us about the Institute for Financial Wellbeing (IFW) and your role there?

I founded the IFW to be a meeting place for like-minded financial advisors and planners. It runs events, training, and conducts research, all around the principle of helping people to have a relationship with their money that will make them happier. I was Chair for the first two years, but once we achieved institute status, I stepped away to allow others to take it forwards.

How do you define financial wellbeing?

Back in 2015 I was writing a book to help people make their own financial plan. I wanted the financial plans they created to help them be happier, not just wealthier.

Inspired by the work of the Penny Brohn UK Cancer Centre, I came up with the term Financial Wellbeing for the title of that book. It’s rather taken off since!

Some use financial wellbeing to describe what I would call financial resilience. I think this misses the opportunity to improve our relationship with money, which can, in itself, solve some of those resilience issues.

For me, therefore, financial wellbeing is a broad topic, which covers anything which informs us about the relationship between money and happiness.

How does this tie in with Consumer Duty?

As a financial planner for 20 years, I found it frustrating that regulation focuses on the sale of a product. The word ‘suitability’ can be open to a great deal of interpretation, and often relates to a mathematical calculation, rather than helping a client to achieve long-term objectives.

One reason for this is that it is not easy to quantify whether client wellbeing has increased as a result of the financial advice given. So I’m delighted that demonstrating the impact of advice is one of the central tenets of Consumer Duty.

This is why I am about to launch a simple low-cost tool for firms to measure the financial wellbeing of their customers. This allows them to track the impact of their advice on their clients’ relationship with money, and its effect on their overall wellbeing. The firm can use this data to submit to the FCA, for training, and in their marketing.

How key is financial education as a building block to financial wellbeing?

Actually, I’d make this the other way round. Financial education tends to focus only on the nuts and bolts of managing money – which is really important, but I think it’s the wrong place to start. If we first learned about what makes us happy – from academic research, psychology, neuroscience, theology – then we would focus on very different aspects in our financial education. For example, understanding set point theory sheds light on retail therapy, and how it leads us down a potentially bad path. As a result, spending habits would improve.

And finally, on a more personal note, a question we ask most of our guests: if £10,000 landed in your lap tomorrow, what would you do with it?

I would open a record shop. I am a long time lover and collector of music. I sell vinyl at local markets, and buy collections – some of which invariably ends up in my own collection! It’s been a dream since I was a teenager to open a record shop and talk music all day long.

Some really insightful perspectives, thanks for sharing, Chris! We hope you manage to open your record shop someday.  

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The content of any discussions shouldn't be taken as an indication of future FSCS policy positions. The views expressed by guests are their own and don't reflect the views of FSCS.