I love this chapter, truly. Early on in my career I realized the need for and differentiation of Goals vs. Priorities
In fact, if you have gone through the formal financial planning process with me, you have undoubtedly participated in my “card game” A simple practice designed to identify and understand your particular “priorities” not just some random goal you think you should have..
In this chapter, the author, Paul Schervis, opens up the 25 dollar word “discernment”, defined as a method by which you an figure out the wisest uses of your time, talent and treasure, and implement your decisions in a competent manner. He goes on “You are at the center of the questions you ask and the answers you seek” (I admit that last part is a bit of a riddle, but I thought it was important to include none the less.
Simply put:
Once you assign your resources to account for yours’ and your family’s basic needs what do you do with the rest?
There is only 3 options really:
- Spend more on lifestyle
- Invest
- Give it away
That’s it! This entire industry, as well as many others is simply about answering that one question with only 3 answers, the trick is discernment, and how to decide which one?
Figuring out the most fruitful allocation of financial resources can feel like a daunting responsibility. For those families with significant wealth, they may reframe the question to:
How will you use your wealth as a means to deeper purposes, once raising your standard of living is no longer of importance?
Thinking through this question is can be a helpful exercise.
There are several life experiences you might reflect on during a discernment exercise – Empathy, Gratitude, Altering Circumstances and Happiness. These personal experiences and feelings may guide your decisions, but likely will not create the perfect circumstance. Most likely the perfect answer is somewhere n between all of them, giving to be helpful can also fulfill your gratitude requirement as well altering circumstance, but may not create happiness. What makes you happy may also be exclusive from the other experiences that directed your decision, ie. That Hawaiian vacation with the family may fill your happiness and gratitude buckets, but how will it create empathy.
One strategy most wealthy families employ is certainly to choose advisors who coach discernment. There is no shortage of product salespeople, and there certainly is a place for that, but when it comes to the icky, sticky, messy conversations surrounding discernment, having people around you who are interested, trained and experienced in the practice is incredibly valuable. Of course there is no shortage of people who have plans for your wealth, attorneys, CPAs, wealth planners, insurance planners, family, charities… But at the end of the day, this is a personal decision driven by your priorities, not theirs. So sifting through those who have your best intentions vs. selling a heart focused service is important
In the end, you will do most of your discernment in the quiet of your heart, in discussions with your family and in your own investigation of what you want to allocate, and to whom.
Remember, discernment is a procedure of self-discovery that clarifies your financial goals- for self and family and Philanthropy, quantifies those goals, and devises plans to reach these goals and implement them.
It’s WYK
Phil