Wellbeing Part I

A few months ago I was given a copy of the book Wellbeing – The Five Essential Elements by Tom Rath and Jim Harter[1]. In this book Rath and Harter look at the five essential elements that shape our lives: Career Wellbeing, Financial Wellbeing, Physical Wellbeing, Social Wellbeing and Community Wellbeing.

 

Wellbeing is defined as a good or satisfactory condition of existence; a state characterized by health, happiness and prosperity.[2] I would imagine there are few people in the world who would not want to strive to be in a state of health, happiness and prosperity. This book intrigued me because while “being in a state of health, happiness and prosperity” can seem somewhat ambiguous, this book uses research and common sense in helping us define exactly what wellbeing is and how to achieve it. Granted, no two people will define what health, happiness and prosperity are the same way, but the authors, using research from across 150 countries; give the reader a great starting point to defining and finding their own wellbeing.

 

In the introduction to the book the authors say “Wellbeing is about the combination of our love for what we do each day, the quality of our relationships, the security of our finances, the vibrancy of our physical health, and the pride we take in what we have contributed to our communities.”

 

In today’s newsletter we will explore the areas of career, physical, social and community wellbeing then dig deeper next Friday into the area of Financial Wellbeing. Most of this next section will come directly from the book.

 

Career Wellbeing – liking what you do every day

 

“People with high Career Wellbeing wake up every morning with something to look forward to doing that day. They also have the opportunity to do things that fit their strengths and interests. They have a deep purpose in life and a plan to attain their goals. In most cases, they have a leader who motivates them and friends who share their passion.”

 

Social Wellbeing – having strong relationships and love in your life

 

“People with high Social Wellbeing have several close relationships that help them achieve, enjoy life, and be healthy. They are surrounded by people who encourage their development and growth, accept them for who they are, and treat them with respect. They deliberately spend time investing in the networks that surround them.”

 

Physical Wellbeing – having good health and enough energy to get things done on a daily basis

 

“People with high Physical Wellbeing manage their health well. They exercise regularly, and as a result, they feel better. They make good dietary choices, which keeps their energy high throughout the day and sharpens their thinking. They get enough sleep to process what they have learned the day before and to get a good start on the next day.”

 

Community Wellbeing – the sense of engagement you have with the area where you live

 

“People with high Community Wellbeing feel safe and secure where they live. They take pride in their community and feel that it’s headed in the right direction. This often results in their wanting to give back and make a lasting contribution to society. These people have identified the areas where they can contribute based on their own strengths and passions, and they tell others about those interests to connect with the right groups and causes.”

 

As you start to think about the process of wellbeing in your own life it helps to sit down and think about what the best possible future is for you, and what your ideal would look like in each of these five areas. The authors found that 66% of people are doing well in at least one area, but just 7% are thriving in all five. How about your own life? How would you assess how you are doing in each area?

 

[1] Published by Gallup Press, 2010 ISBN: 978-1-59562-040-8

2 http://dictionary.reference.com/browse/wellbeing

 

Ryan H. Law, M.S., AFC

Department of Personal Financial Planning

Office for Financial Success Director

University of Missouri Center on Economic Education Director

 

239E Stanley Hall

University of Missouri

Columbia, MO 65211

 

573.882.9211 (office)

573.884.8389 (fax)

 

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[1] Published by Gallup Press, 2010 ISBN: 978-1-59562-040-8

[2] http://dictionary.reference.com/browse/wellbeing

Symposium III is in the books...

Wednesday was our Personal Finance Symposium III: In Debt We Trust, Living in a Leveraged World.  It exceeded my expectations and I’ve had several calls and emails this morning from both speakers and participants indicating their agreement.   Many of you were not able to come, so I thought I’d pass along some quick kernels of information that I remember from each speaker. 

 

Michael Dorigan, Ph.D. is the Senior Quantitative Analyst at PNC Capital Advisors in Philadelphia, Pennsylvania.  He spoke on “Interest Rate Risk Measurement & Management”.  This could have been a very dry topic but his sense of humor turned the talk into a very engaging presentation.  While some of the concepts were out of the reach of the lay audience, his didactic style led us to an understanding of how bond managers reduce the risk of your bond portfolio.  Besides telling us not to worry about large-scale municipal bond defaults, he opened our eyes to developments in the management of bond investments.  In particular, he covered how modifications in risk analysis by bond managers can help produce products that best suit investors’ tolerance for risk.  Yet, he concluded that understanding one’s risk tolerance is key and you know that understanding yourself is up to you.  Hence, we had the next speaker.

 

Ted Klontz, Ph.D., is an author and the Principal of Klontz Consulting Group, based in Nashville, Tennessee.  His talk was entitled “When Logic Leaves the Room: Understanding How Difficult Financial Decisions Are Made” and it grabbed everyone’s attention.  His research focuses on how each of us has “animal” brains that interact with our “Einstein” brain to make decisions.  Our animal brains make many more decisions than our Einstein brain and the animal in us worries about pain and pleasure and wanting to be a part of the tribe, as opposed to what is analytically the best course of action for our futures.  For example, we see the stock market go up, up, up.  We get excited.  We see our friends (our tribe) investing and we don’t want to be left behind, so we invest….at precisely the wrong time.  The same thing can happen when the market goes down, we panic and run (sell) when we need to be thoughtful and analytical.  Of course, the media feeds our animal brain as they know what makes us tick – fear and pleasure.  The bottom line, many people need to work with an advisor that understands how fears and pleasures interfere with our decisions and who can help clients use this understanding to make a plan for the future that works – and stick with it!

 

During lunch, the Honorable Robin Carnahan, Secretary of State of Missouri, addressed the group about the work of her office.  As you should be aware, her office is in charge of all the securities regulation in the state of Missouri, as well as investigating all complaints and incidences of potential fraud.  She was not only delightful to listen to but a comfort to hear speak about her passion for the citizens of our great state.

 

After lunch, “The Quest for Alpha” was presented by Larry Swedroe, Principal and Director of Research, Buckingham Asset Management, St. Louis, Missouri.  This was a show stopper.  His report on the mass of research supporting equity index investing, as opposed to active portfolio management by mutual fund managers, was eye opening.  It was also unsettling to some of the financial service professionals in the audience who provide actively managed mutual funds to their clients.  He did concede that the most important thing for people is, often, to have some help in dealing with the emotions of investing – taming their “animal” brains – which an advisor can provide.  Yet, if a person can stay on track, there are many ways a person can index; from ETFs to index mutual funds.  If you are interested, I would recommend you read his recently released book of the same title.  As I told the audience, next to Twain, Steinbeck, and Dickens; Swedroe is my next most read author – if you count books instead of pages!

 

Finally, “When Death Do Us Part:  Estate Planning Under the New Tax Law” was presented by Scott Blakesley; a partner with Spencer Fane Britt & Browne LLP in  Kansas City, Missouri.  Imagine for a moment what a challenge it would be to talk about taxes and dying at 3:00 in the afternoon.  Yet, Scott made it interesting and, while currently estate tax laws are in limbo, his presentation impressed upon the audience the importance of understanding the issues of estate transfer and helping your clients (or yourself) in making these decisions.   I agree.  To top it off, not only did the audience stay awake and attentive during his talk, he concluded by singing a song about estate planning that he had written.  I darn near cried, as it topped off a great day of interaction between students, faculty, financial professionals, and the public.  Each of us were left with much to contemplate - with respect to our own personal quest for financial success, our understanding of ourselves, what we don’t know, and what is inevitably our fate.

 

Please, join us for Personal Finance Symposium IV on April 25, 2012.    Mark your calendar, today.  In the meantime, don’t let the “animal” brains win!