“If you study all philosophy and religion, both Western and Eastern, from the beginning of recorded history, you’ll basically find the same four dimensions: the physical/economic, the mental, the social/emotional and the spiritual. Different words are often used, but they represent the same four dimensions of life. They also represent the four basic needs and motivations of all people: to live (survival), to love (relationships), to learn (growth and development), and to leave a legacy (meaning and contribution).” – Stephen R. Covey (1932-2012), the 8th Habit, a renowned author, educator, and speaker.
This insightful quote by Covey underscores the holistic approach to personal development and the interconnectedness of various facets of human existence. Our Game Plan resonates deeply with these principles, drawing similar conclusions. Read More.
By merging the ancient personal development framework—what I refer to as the ancient natural cycle from creation to manifestation—with contemporary management theories from leading global thinkers, we create a complete and empirically supported picture. Influential leaders and institutions such as:
- Harvard Business Review/ BCG
- McKinsey Health Institute
- CFA Institute Research Foundation
- The Firms of Endearment Study
- London Business School
- United Nations
Each piece of this jigsaw puzzle is groundbreaking in its own right, but together they form a phenomenal outcome: a personal development framework that can drive wealth creation. This is a pivotal objective for non-intermediating financial planners.
Sir Keir Starmer has said “wealth creation” is his top priority in an election pitch to the middle class and middle ground. The Labour leader also unveiled the party’s plan to get more people into work, insisting “those who can work, will work”. The “back to work plan” several proposed employment support and welfare benefits reforms aimed at increasing the employment rate from 75% to 80%.
Wealth creation is my top priority too. Wealth creation for the 60% of the world population living below the “empowerment line”!
Examining the United Nations’ objectives and methodologies, we see a potential pathway to ending world poverty within this integrated picture.
Here, I bring these pieces together to reveal the whole picture, inspiring the same hope I feel—that by working together, we can make the world a better place within our generation.
Here are the pieces:
1. Harvard Business Review/ BCG
Strategize Your Life, a programme tested on a diverse group of individuals, from students to retirees, seeks to repurpose the methodologies of corporate strategy to aid individuals in defining their version of a meaningful life. The core premise lies in the adaptation of seven strategic questions, traditionally used in corporate settings, to personal introspection. These questions range from defining what constitutes a great life to ensuring a successful, sustained life change. This methodological transference from the boardroom to the living room introduces a structured approach to personal development, a concept often left to the whims of circumstance. Read More.
[Rainer Strack, Susanne Dyrchs, and Allison Bailey, BCG, 2023.]
2. McKinsey Health Institute & McKinsey Global Institute
A recent McKinsey report highlights a crucial aspect of well-being: the interconnectedness of mental, social, spiritual, and physical health. This perspective aligns seamlessly with our ethos at the Academy, where we believe in the comprehensive nurturing of individuals. The report underscores that most drivers of health extend beyond conventional healthcare and are within our control. This revelation is a wake-up call for financial planners, emphasising the need to adopt a more inclusive model of client well-being. Read More.
[Lars Hartenstein and Tom Latkovic, MHI, 2022.]
The common characteristic among the underserved is their struggle to balance income with essential expenditures. These individuals often fall below the “empowerment line”, a concept introduced by the McKinsey Global Institute. The empowerment line represents the expenditure required for an individual to afford a basket of essential goods and services, allowing for a frugal but decent living standard. It includes nutritious food, housing, energy, safe water, transportation, healthcare, education, clothing, and communication, with a small margin for recreation and savings to prevent falling back into poverty. Read More.
[Kweilin Ellingrud, Marco Piccitto, Tilman Tacke, Rebecca J. Anderson, Ishaa Sandhu, and Kevin Russell, MGI, 2024.]
3. CFA Institute Research Foundation
In the wake of significant societal and economic shifts, traditional financial planning models often fall short in addressing the dynamic nature of modern life. Traditional models, such as the one detailed in “Lifetime Financial Advice: A Personalized Optimal Multilevel Approach” by Thomas M. Idzorek and Paul D. Kaplan, provide foundational insights but require substantial adaptation to remain relevant. This article aims to discuss these necessary evolutions and propose a more flexible approach that aligns with the varied life paths of today’s society. Read More.
[Thomas M. Idzorek and Paul D. Kaplan, CFA Institute, 2024. “Lifetime Financial Advice: A Personalized Optimal Multilevel Approach”.]
4. The Firms of Endearment Study
Reevaluating Human Capital: From Bond-Like to Equity-Like
Human capital, defined by the CFA Institute as the present value of all future earnings, has often been considered stable and predictable, much like bonds. This perspective emphasises the steady, albeit limited, growth potential of human capital. However, Sisodia’s research on firms of endearment—companies that prioritise stakeholder well-being and purpose-driven practices—reveals that such entities significantly outperform the market.
Sisodia’s study demonstrates that firms of endearment achieve returns up to fourteen times greater than the S&P 500 over a 15-year period. This transformative potential suggests that if individuals—referred to here as “humans of endearment”—adopt similar strategies, they too can achieve superior, equity-like returns on their human capital. Read More.
[Jag Sheth, David B. Wolfe, and Raj Sisodia, Firms of Endearment Study, 2014. – see below]
5. London Business School
According to London Business School professors Lynda Gratton and Andrew J Scott, authors of The 100-year life, living and working in an age of longevity, we each have three types of intangible assets where we must gather data, evaluate status, and form strategies in financial planning. Read More.
Productive assets: help an individual become productive and successful at work and boost income (and create wealth), e.g., skill, knowledge, location, time, energy, contacts, character, etc.
Vitality assets: mental and physical health and well-being, e.g., friendships, positive family relationships and partnerships, personal fitness, and lifestyle choices.
Transformational assets: self-knowledge, capacity to reach out into diverse networks, openness to new experiences.
The London Business School (LBS) defines productive assets as assets that generate income or revenue for their owner or user. These assets include physical assets, such as machinery or property, and intangible assets, such as intellectual property, mailing lists, or brands.
The LBS definition highlights the importance of productive assets in generating economic growth and increasing overall prosperity. Individuals or companies can generate income, create jobs, and contribute to developing their local or national economy by investing in productive assets.
Overall, the LBS definition of productive assets emphasises these assets’ role in driving economic growth and prosperity and underscores the importance of investing in assets that generate sustainable, long-term returns. Read More.
[Lynda Gratton and Andrew J. Scott, LBS, 2017.]
6. United Nations
The idea of using productive assets and leveraging entrepreneurial opportunities to create sustainable livelihood comes from the United Nations. It is the crucial component of Sustainable Development Goal #1 to End World Poverty. Part of the 2030 Agenda. Read More.
Poverty eradication | Department of Economic and Social Affairs (un.org)
“Priority actions on poverty eradication include improving access to sustainable livelihoods, entrepreneurial opportunities and productive resources.”
[United Nations, 2030 Agenda: Sustainable Development Goal 1, 2015.]
In summary, the comprehensive personal development framework we have discussed is an integration of ancient wisdom and modern empirical studies. By synthesizing insights from prominent institutions such as Harvard Business Review, McKinsey Health Institute, CFA Institute, London Business School, and the United Nations, we can envision a holistic approach that aligns with the four dimensions of life as articulated by Stephen R. Covey: physical/economic, mental, social/emotional, and spiritual.
The diverse pieces of this framework, when brought together, present a cohesive strategy for personal and financial growth. Harvard’s strategic life planning methodology, McKinsey’s interconnected health perspectives, CFA’s dynamic financial planning models, and LBS’s asset-based productivity insights collectively highlight the multi-faceted nature of human well-being and potential. Additionally, the United Nations’ emphasis on sustainable livelihoods underlines the critical need for entrepreneurial opportunities and productive resources to eradicate poverty.
Ultimately, the key to unlocking this potential lies in viewing personal development not as isolated components but as an integrated system where each aspect supports and enhances the others. This holistic vision is not only aspirational but achievable, provided we embrace the principles of purpose-driven practices and stakeholder well-being exemplified by firms of endearment. By adopting such a comprehensive approach, individuals and communities can aspire to create wealth in all its forms—financial, social, emotional, and spiritual—thus fostering a more equitable and prosperous world.
The path forward is clear: by leveraging these insights and methodologies, we can craft a future where wealth creation and well-being go hand in hand, ensuring that our efforts today lay the foundation for a sustainable and thriving society for generations to come. As we continue to build on this framework, let us remain committed to the principles of transparency, integrity, and inclusivity, striving always to create a legacy of abundance and harmony. Together, we can indeed make the world a better place within our lifetime.
Q&A for “The Game Plan: A Combination of Modern Empirical Studies on Wealth Creation”
Q1: What are the four dimensions of life identified by Stephen R. Covey?
A1: Stephen R. Covey identified four dimensions of life: physical/economic, mental, social/emotional, and spiritual. These dimensions correspond to the basic needs and motivations of all people: to live (survival), to love (relationships), to learn (growth and development), and to leave a legacy (meaning and contribution).
Q2: How does the integration of ancient personal development frameworks and modern management theory benefit personal growth?
A2: By overlaying ancient personal development frameworks with modern management theories from leading global institutions, individuals gain a comprehensive approach to personal development. This integration provides structured methodologies and credible empirical support to help individuals create wealth and achieve holistic well-being.
Q3: What is the “Strategize Your Life” program from Harvard Business Review/BCG, and how does it contribute to personal development?
A3: The “Strategize Your Life” program adapts seven strategic questions traditionally used in corporate settings for personal introspection. This structured approach helps individuals define their version of a meaningful life and introduces a systematic methodology for personal development, transferring strategic planning from the corporate boardroom to individual life planning.
Q4: What key aspect of well-being does the McKinsey Health Institute highlight?
A4: The McKinsey Health Institute emphasises the interconnectedness of mental, social, spiritual, and physical health. It highlights that many drivers of health extend beyond conventional healthcare and are within individual control, underscoring the need for a more inclusive model of client well-being in financial planning.
Q5: What is the “empowerment line” concept introduced by the McKinsey Global Institute?
A5: The “empowerment line” represents the expenditure required for an individual to afford a basket of essential goods and services, allowing for a frugal but decent living standard. It includes essentials like nutritious food, housing, energy, safe water, transportation, healthcare, education, clothing, and communication, with a small margin for recreation and savings.
Q6: How do traditional financial planning models need to evolve, according to the CFA Institute Research Foundation?
A6: Traditional financial planning models, such as those detailed in “Lifetime Financial Advice: A Personalized Optimal Multilevel Approach,” need substantial adaptation to remain relevant. Modern life paths are dynamic, and financial planning models must become more flexible to address the varied needs of today’s society.
Q7: What is the significance of the “Firms of Endearment” study for personal development?
A7: The “Firms of Endearment” study demonstrates that companies prioritising stakeholder well-being and purpose-driven practices significantly outperform the market. This suggests that individuals adopting similar strategies—referred to as “humans of endearment”—can achieve superior returns on their human capital, analogous to equity-like returns.
Q8: According to London Business School, what are the three types of intangible assets crucial for financial planning?
A8: London Business School professors Lynda Gratton and Andrew J. Scott identify three types of intangible assets crucial for financial planning:
- Productive assets: Skills, knowledge, location, time, energy, contacts, and character that boost income and create wealth.
- Vitality assets: Mental and physical health, well-being, friendships, positive family relationships, and lifestyle choices.
- Transformational assets: Self-knowledge, capacity to reach out into diverse networks, and openness to new experiences.
Q9: How does the United Nations’ Sustainable Development Goal #1 relate to personal development and poverty eradication?
A9: The United Nations’ Sustainable Development Goal #1 aims to end world poverty by improving access to sustainable livelihoods, entrepreneurial opportunities, and productive resources. This aligns with the comprehensive personal development framework discussed in the article, emphasising the importance of leveraging entrepreneurial opportunities to create sustainable livelihoods.
Q10: What is the overall message of the article “The Game Plan: A Combination of Modern Empirical Studies on Wealth Creation”?
A10: The article emphasises that integrating ancient personal development frameworks with modern empirical studies from leading institutions provides a comprehensive approach to personal and financial growth. By viewing personal development as an interconnected system, individuals and communities can achieve holistic well-being, create wealth, and work towards eradicating poverty, fostering a more equitable and prosperous world.
Further Information: What are Firms of Endearment?
The “Firms of Endearment” study, led by Raj Sisodia and co-authors Jag Sheth and David B. Wolfe, explores how companies that genuinely care for their stakeholders achieve extraordinary success. The study is detailed in the book “Firms of Endearment: How World-Class Companies Profit from Passion and Purpose.”
Key Insights from the Study:
- Stakeholder Integration: Firms of Endearment (FoEs) prioritize the well-being of all their stakeholders, including customers, employees, suppliers, community, and shareholders. They see each stakeholder as integral to the company’s success and foster strong, mutually beneficial relationships.
- Purpose Beyond Profit: These companies have a compelling purpose that goes beyond making money. They strive to make a positive impact on the world, which energizes and aligns all stakeholders with the company’s mission.
- Culture of Caring: FoEs cultivate a culture of care, compassion, and trust. This environment nurtures employees, encourages innovation, and builds loyalty among customers and partners.
- Long-term Perspective: Unlike traditional companies focused on short-term gains, FoEs invest in long-term strategies that build sustainable value. This approach often leads to better financial performance over time.
- Superior Financial Performance: The study shows that FoEs significantly outperform the market. Over a 10-year period, they delivered returns that were nearly 14 times higher than those of the S&P 500 companies.
Examples of Firms of Endearment:
- Patagonia: Known for its environmental activism and ethical business practices, Patagonia places a strong emphasis on sustainability and social responsibility.
- Whole Foods Market: Prioritizes high-quality natural and organic foods, ethical sourcing, and community engagement.
- Southwest Airlines: Focuses on employee satisfaction, customer service, and operational efficiency, creating a loyal customer base and a positive work environment.
Implications for Business:
The FoE study challenges the traditional business paradigm that prioritizes profit maximization over all else. It suggests that by embracing a more holistic, stakeholder-centric approach, companies can achieve superior financial results while also contributing positively to society. This aligns closely with the ethos of the Academy of Life Planning, which emphasizes transparency, integrity, and a harmonious blend of financial, social, environmental, and spiritual well-being.
In essence, the Firms of Endearment study advocates for a transformative approach to business, where purpose, passion, and profit coexist, leading to sustainable success and a better world for all stakeholders. Read More.
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