The 7 Pillars of Financial Health: Partnering with a Professional to Thrive

Based on insights gleaned from coaching and consulting with hundreds of financial and investment advisors over a career spanning 25 years, Rob Macdonald, Fundhouse, has recently published a book The 7 Pillars of Financial Health.

Cover of Rob Mac Donald's book, The 7 Pillars of financial health.
Rob Macdonald, Head of Strategic Advisory Services, Fundhouse

The 7 Pillars of Financial Health author.

Rob Macdonald holds an MPhil (Management Studies) from Oxford University and is a former director of the MBA programme at the Graduate School of Business. Macdonald is co-organiser of the Humans Under Management South Africa conference and is the editorial advisor to Blue Chip. He is a sought-after speaker and writer and a qualified coach and counsellor. 

Macdonald outlines why we need to radically rethink how we approach money in this compelling read, which is highly recommended for advisors who want to remain relevant in their professions. Similarly, it contains practical information that clients could use in the process of dealing with investment concerns. As Warren Ingram writes in the foreword, The 7 Pillars of Financial Health is not only aimed at professional planners: “Whether you’re a seasoned investor, a young professional just starting out, or simply an individual seeking financial well-being, this book will revolutionise your understanding of money and its role in shaping a fulfilling life.

Macdonald suggests that money ranks as a leading source of relational conflict and household stress in surveys worldwide despite the abundance of information and technology to help us manage it. In the introduction, he says that we go wrong by failing to recognise how completely interconnected and interdependent our lives and our money are.

Macdonald uses the analogy of our physical health. We all know what to do to be physically healthy – eat healthily, exercise regularly, get enough sleep and limit our stress levels. But we struggle to do this because we are human. We are tempted by chocolate cake, delicious wine and the fact that Netflix is much more fun than going to the gym. He says, “The foibles of being human are summed up by the quip that ‘we spend our health to gain our wealth then spend our wealth to regain our health’.” To overcome the challenges of being human while developing financial health, he enlarges seven skills that we need to work on throughout our lives.

Pillar 1. Clarity 

Two succinct CS Lewis quotes underpin this principle. First, “If you don’t know where you’re going, any road will get you there” and second, “You can’t go back and change the beginning, but you can start where you are and change the ending”.

For Macdonald, the primary pillar is that of clarity. Clarity is both the starting point and the ending point of financial health. One needs to be clear on what one wants from your life and money. This enables a financial planner to craft a sound financial plan and be able to give the required appropriate advice. Financial planning is more dynamic than simply setting goals and meeting them. It is an ongoing process of not only making decisions about our lives and money but also implementing them. Because our lives change all the time, clarity will need to be revised constantly.

Macdonald addresses the issue as to how we get the clarity we need.

Three trends influence this issue. First, there is the misplaced concept that technology will replace financial planners. Secondly, financial planning as a discipline is evolving. Money is not the sole preoccupation. Life is now a vital consideration. Thirdly, when it comes to money, human behaviour is unfortunately not evolving. Attention needs to be paid to behaviour modification rather than pure money management in isolation.

As to the areas in which we need clarity, Macdonald sets out some very good ideas/sound principles.  These include a better understanding of how our perception of time influences us. Together with this, our relationships are important, as well as our sense of control in making decisions. But to gain clarity, we need the other six essential skills for financial health. 

Pillar 2: Confidence 

This principle brilliantly addresses the question of how confidence is relevant to financial advice. Importantly, as humans, according to Anais Nin, we don’t see things as they are. We see them as we are. This is an example of the hidden jewels contained in this book.

Macdonald develops the notion that confidence is an advice value and not a product per se. Concomitant with this, he sets out four kinds of financial advisors. Any serious advisor needs to try to understand where they are positioned: the salesperson, the technocrat, the computer (robo-advisor) and the professional (trusted advisor). Confidence requires a coaching approach. The future of financial planning is not expert advice only. It is helping clients engage in financial change, guided by the concept that financial health is both behavioural and emotional.

Pillars 3, 4 and 5. Connection, Curiosity and Collaboration

These pillars interrelate perfectly. The key quote here that sets the framework is from a distinguished economist, Minouche Shafik, “In the past jobs were about muscles, now they are about brains and in the future, they are about the heart.”

According to Brené Brown, a connection is “the energy that exists between people when they feel seen, heard and understood”. Macdonald believes that the starting point is for the financial advisor to establish a connection, and this is enhanced by developing the concept of curiosity.

For curiosity, he uses another powerful quote, this one by Charles Mackesy in The Boy, the Mole, the Fox and the Horse:

“Isn’t it odd we can only see our outsides, but nearly everything happens on the inside.”

The resultant collaboration is a masterpiece. Macdonald attests that it is helpful to understand what drives our decision-making. Given the complexity of us as human beings and our need to simplify our complex worlds, Macdonald uses The Bermuda Triangle of Financial Behaviour framework to help us understand what’s at the core of the three key influencers on our decision-making: cognitive biases, emotional responses and social pressure. This helps advisors to get a clear sense of our relationship with money because, as Macdonald says, “We all have a money story”.

Pillars 6 and 7. Communication and Courage.

These final principles offer practical insight into the skills that financial advisors need to attend to. Communication with clients needs to be consistent, relevant, concise, clear, timely and transparent. Some good practical insight is of great value to advisors.

Lastly, all the pillars require courage. This principle is the crowning apex of Macdonald’s book. He explains that our money and lives are inextricably linked so when we about how to ensure that our financial plan suits our lives, it is important to have the courage to engage with our life and our money in equal measure and to work out what we want from our life and money.

However, when it comes to our lives and money, we can sabotage ourselves and this is why working with a professional financial planner is important. Macdonald argues that financial planners protect us against self-sabotage and prevent us from making the decisions we later regret.

Reg Thomson, Director, DTB Wealth
Reg Thomson, Director, DTB Wealth

From gaining clarity on our priorities to building strong connections with trusted advisors, Macdonald demonstrates how the seven skills (pillars) empower individuals to manage their financial health. The best gift any advisor can buy for themselves is this book. A volume of astute insight, captivating anecdotes and practical strategies that will enhance your practice, your skill and most importantly, your relationship with money.