IT'S THE RELATIONSHIPS, STUPID

It didn't take me long to detect a pattern. I was newly arrived at CFP Board and beginning to receive visits from CFP® certificants. Although the certificants represented a wide array of groups, causes and companies, it was the similarity, rather than the differences in their messages, that was most striking.

The shared message was that financial health is related to physical, mental and spiritual health and that financial planning is less likely to be effective if it is offered as an information dump, the way airplanes drop propaganda brochures over foreign soil. To anyone who has spent a career helping people improve their financial health, this may be boringly apparent. During a recent trip to Dallas to meet with both FPA and NAPFA, when I asked planners how the profession would continue to add value as more information becomes instantly available online, they took less than a nanosecond to respond, "It's the relationships." (They were nice enough to leave "stupid" off the end.)

As obvious as this may seem to insiders, however, it is not a truth universally acknowledged in policy circles. Indeed at a recent Senate committee hearing focused on financial literacy, no one else made the point that information alone is not the answer to financial planning and literacy shortfalls. Yet we know that for a wide variety of human behaviors, the only programs with proven track records are those that offer ongoing personal support along with information.

Those with a shared interest in helping people benefit from financial planning need to help policymakers connect these dots. Financial planning and literacy information will have its greatest effect if it is offered as part of ongoing, professional and informed relationships.

Sarah Ball Teslik

Well, it's official: The price of happiness is $4.8 million. That, according to Coutts Bank, is how much it would take to finance a lifetime of leisure, fully equipped with a five-bedroom house, a maid, a butler, two expensive cars, plus an apartment and yacht in southern France. Oh yes, and two ritzy vacations a year to get away from the stress of living the high life. Sounds great. But would most people ultimately be any happier with a $4.8 million-funded lifestyle? Recent research into the effects of money on happiness suggests probably not.

Over the past few years, there has been an explosion of research into human emotions in general and happiness in particular. The field has its own publication, the Journal of Happiness Studies, which is edited by the same researchers who maintain the World Database of Happiness, a hub for statistical data from around the globe. In his book Happiness: Lessons from A New Science, Richard Layard, an economist and member of the British House of Lords, explores one of the central questions in the field: Why haven't the happiness levels of people living in Western societies risen along with their incomes. "On average people are no happier today than people were fifty years ago," Layard writes. "Yet at the same time average incomes have more than doubled." One of the most intriguing findings is that once an individual earns enough to meet his or her basic needs, additional income has a minimal effect on happiness. How can that be? Isn't more always better?

Apparently not, if more money means less of the other key ingredients of happiness. Layard identifies a hierarchy of happiness, the seven factors that are most crucial to our sense of psychological wellbeing. At the top of the list are our family relationships, followed closely by our financial situation, job satisfaction, friends and community, health, personal freedom and personal values. If a higher income is achieved at the expense of family relationships, Layard argues, then the unhappiness caused by never getting home in time to kiss the kids goodnight negates the effect of having more disposable income.

There's another reason why more money does not necessarily translate into more happiness. We are extremely status-conscious creatures, always comparing ourselves to others. Our happiness is determined not just by what we have, but how much more we have (or think we have) than other people. Layard describes a fascinating experiment in which a group of Harvard students was asked in which of two imaginary worlds they would prefer to live: one in which they received $50,000 a year and others received $25,000, or one in which they received $100,000 a year and others received $250,000. A majority chose the first world, where they would earn less but still be top dog.

Money clearly pushes a lot of strange buttons in us. And when it comes to our emotional relationship with money, we are not always the rational actors that thinkers like Adam Smith believed us to be. The irrational exuberance, or gloom, money can inspire in us is further exacerbated by the tantalizing effects of advertising and celebrity culture, the increasing demands of the workplace, and the feeling that financial security is becoming more and more precarious. "To be happy is to feel you have control over your environment and your life," says Dylan Evans, author of Emotion: The Science of Sentiment. "But this sense of security can be eroded by modern life, something you can see in the rise of stress-related illnesses and the use of anti-depressants. Life has become so much easier in so many ways, but an easy life is not necessarily a happy one."

So how can we spur growth in happiness? Layard has a few ideas, starting with the family, the cradle of happiness: create more flexible working arrangements so jobs and family life can be more easily integrated; make parental leave, for things like illness or childbirth, easier; and make child care more widely available and affordable. Layard notes that the Scandinavian countries, which have already implemented many of these policies, score highest on the World Database of Happiness. At the same time, he stresses that chronically high levels of unemployment, like those in many European countries, have to be eliminated. Layard also urges that happiness levels be monitored as closely as GDP. Economic growth may be chugging along nicely at 3%, but what if GDH (Gross Domestic Happiness) indicates a depression is on the way? Then we may have to decide which is more valuable, time or money.

- James Geary

Americans already have the longest working hours in the world, and now the workplace is also becoming the spot where people's most important financial decisions are made. Myfinancialadvice is one of several organizations established in recent years that seeks to bring unbiased, affordable financial advice to the middle-income market by making it easy to find qualified financial planning services through the Internet. Read more about how Myfinancialadvice is working to make financial planning advice available at the workplace.

Kevin Condon, CFP®, Executive Vice President, Advisor Services with Myfinancialadvice, will speak about financial advice in the workplace at CFP Board's 2006 Annual Meeting on Friday, August 4, 2006, at the Los Angeles Convention Center. General admission is free, but registration is required by July 19, 2006. www.CFP.net/annualmeeting

Report on May 2006 Board of Governors Meeting

CFP Board's governing body, the Board of Governors, met May 17-19, 2006 in closed session in Washington, D.C. Read more about the Board of Governors meeting.

IRS Registers with CFP Board as Continuing Education Sponsor

CFP Board welcomes the Internal Revenue Service (IRS) as a registered continuing education (CE) sponsor. Twenty-four of the 36 seminars offered at the 2006 Nationwide Tax Forums presented by the IRS are accepted by CFP Board for CE credit.

There are currently more than 2100 CE sponsors registered with CFP Board. To find out if a CE sponsor is registered, visit our Web site at www.CFP.net/sponsors.

Changes to CFP Board's Disciplinary Rules and Procedures

CFP Board's Board of Governors approved at its May 2006 meeting several changes to CFP Board's Disciplinary Rules and Procedures. The updated text of the revised Articles is available for download at www.CFP.net/certificants/conduct.asp.

Read more about the changes to CFP Board's Disciplinary Rules and Procedures.

CFP Board Disciplinary Actions

CFP Board recently announced public disciplinary actions against the following individuals' rights to use the CFP® certification marks:

• Carla L. Chastain (Rogers, Arkansas): Suspension for One Year
• Richard A. Daniels (Chagrin Falls, Ohio): Interim Suspension
• Darrel E. DeMarco (Tallmadge, Ohio): Revocation
• David A. Duryee (Seattle, Washington): Suspension for Three Months
• William Alan Gay (Greenwood Village, Colorado): Interim Suspension
• Michael C. Hirschi (Sandy, Utah): Suspension for Three Months
• Kyle Holland (Austin, Texas): Suspension for One Year and One Day
• Solomon O. Onita (Houston, Texas): Revocation
• James J. Reilly (Mamaroneck, New York): Suspension for One Year and One Day
• Ralph C. Williams, CFP® (Lancaster, California): Letter of Admonition

Volunteers Needed for Los Angeles Field Test and Financial Planning Clinic

CFP Board seeks CFP® certificants to assist with a Field Test to be held in Los Angeles on Friday, August 4, 2006. If you have an interest in becoming involved in the creation of future CFP® Certification Examinations, please visit our Web site at www.CFP.net/signup to learn more and register to assist with the Field Test.

Volunteers are also sought to staff a Financial Planning Clinic on Friday, August 4, 2006, during the General Session of CFP Board's Annual Meeting at the Los Angeles Convention Center.

Read more about these volunteer opportunities.