Achieving contentment is the biggest gain

THIS month marks the 25th anniversary of my career in wealth advisory. Time really flies. I had a good career – not that it was worry-free. Instead, all the crises I have gone through made it good because through them, I learnt so much. The feeling of surviving and supporting clients through these difficult periods made my journey meaningful.

There were many pivotal moments but the most significant happened sometime in 2010, just after the global financial crisis (GFC) during which many investors lost their wealth.

I remember vividly that I was walking outside of the McDonald’s restaurant near the Tampines Bus Interchange when suddenly, an inner voice spoke to me. It went like this: “Money has been used as a weapon of mass destruction to destroy many lives in the western world. It is now coming to the East. You have the knowledge, skills, and a Monetary Authority of Singapore licence. What are you going to do about it?”

This epiphany birthed our firm’s “philosophy of sufficiency”. At the heart of this philosophy is contentment. Contentment is when you no longer crave or desire anything that you do not have – but it is not a passive acceptance of your situation.

Rather, it is an active pursuit of things that are most important to you knowing that you cannot have everything. It is a conscious choice to enjoy, appreciate and accept what you have, while giving up the craving of things that you do not. So, it requires you to know what is most important to you.

Since then, the way we plan and invest for our clients has been anchored on the philosophy of sufficiency. How is this philosophy expressed in the way decisions are made?

Insurance planning

The primary purpose of insurance is to protect against loss of income due to death, disability, a medical crisis as well as pay for huge medical expenses. While you should buy as much insurance coverage as you need, please pay as little premiums as you can using term insurance.

Many have told me that they have been asked to buy insurance even when they don’t need it – just in case, as the advice goes. Of course, if you have excess resources, you can always do that. Otherwise, there is always an opportunity cost when you over-insure. We can’t live life trying to mitigate every risk.

Long-term investing

More than a year ago, in one of our webinars, we were asked if we would include cryptocurrency in our core investment portfolios. At that time, cryptocurrency was doing very well.

Our answer then was a simple “no”. It was not because we had the foresight to know that it would crash months later, but because there insufficient evidence that crypto would reliably generate long-term positive returns. It also required clients to take too much risk for the returns they need.

It is for this same reason that we don’t use investments that try to out-guess the markets. Evidence have shown that most fund managers who seek to do this fare worse than the markets. Those who manage to do better than markets can’t achieve this feat consistently.

If there are evidence-based instruments that can reliably generate long-term returns that are enough for our clients to meet their life goals and events, why would we expose them to much higher risk of loss in the hope of getting returns that they do not need? Can you see the philosophy of sufficiency at work?

Legacy and estate planning

Some time back, while working on their legacy and estate plan, my clients were discussing the various clauses they want the lawyer to put into their wills and trust deed to ringfence their assets from certain individuals, as well as control how their assets will be distributed to their children in their lifetime and upon their demise.

As they brought up more permutations, I felt the need to ask them two questions.

The first: “How do you think your children will feel when they finally see these documents?”

After some thought, they replied: “I think they will feel that we don’t trust them.”

“Is that really how you feel about them?” I pressed.

The couple looked at each other and understood what I was trying to help them see. We then went on to discuss how to make their plans simpler while keeping to their main intentions.

Sometimes, we want to control everything – even from our graves. But in sufficiency, we say enough is enough. We just need to achieve our primary purpose and accept that there will be trade-offs. We cannot have everything.

Short-term financial planning

During the 2008 GFC, my firm’s revenue was badly affected. I was not earning much then and had poured my life savings into the business. I had a huge mortgage. I was the sole breadwinner with two young children. I was stressed.

I did not have cash to participate in the equities market, either. In 2010, I reflected and distilled the things that mattered most to me, that will make me really happy. Over the past 15 years, I restructured my personal finances to refrain from spending on things I don’t need, especially with the money I don’t have (via loans, for instance).

Even though the firm has grown exponentially today and my wealth has multiplied, I never felt the need to move to a bigger property, buy a flashy car, or spend more. When the pandemic struck and markets came tumbling in 2022, not only could I buy more into markets, but my heart was also at rest.

The benefit of being in a position of sufficiency is not just peace of mind. It also enables us to make right decisions without being held hostage by money. When there is a need to be generous, I can do so. I can also make business decisions in the best interest of my clients without thinking about how I can upkeep an unnecessarily expensive lifestyle.

I can never understand advisers who feel that they need to “look rich” so that they can serve wealthy clients. I am perfectly at peace with my clients being a lot wealthier than me. My clients do not choose Providend because of our advisers’ wealth; they choose us because of our wisdom.

Finally, knowing what is enough for me allows me to be a servant leader. It is a known fact in my firm that I am not the highest paid and, when needed, they know that I have and will cut my own compensation so that others can have enough. What makes me happier is not that I have more, but that their families are well taken care of.

In the wealth management industry where it is always about accumulating more and maximising returns, to aim for enough is counter-cultural. For some, it is corporate suicide.

But having walked this journey for the past 25 years, I have endured many market crashes, observed what has happened and continues to happen in the world, and journeyed with clients as well. I am convinced that achieving contentment is the greatest gain.

The writer is chief executive officer of Providend Ltd, Singapore’s first and probably sole fee-only comprehensive wealth advisory firm. He can be contacted at chris_tan@providend.com