Do goals matter in financial planning?

Citizen Kane. Forrest Gump. Saving Private Ryan.

What do these great movies have in common?

They all start at the end. Like many of the world’s great stories, they show the end … but then they say, “if you think that’s good, wait until you see how we got there.”

It’s exactly the same with managing your wealth – just with a lot less drama.

Whether it’s your income levels, your ideal retirement, or providing for your family, financial goals give you a clear idea of where you’re going, meaning you can enjoy the journey.

Going for goal

Goals are perhaps the most important part of managing your money. Without a goal, a financial journey loses direction and velocity. Without a goal, a financial plan can descend into a set of principles and aspirations.

The Oxford languages database defines the word ‘goal’ as, “the object of a person’s ambition or effort; an aim or desired result.”

You could also add in words like ‘purpose’ or ‘destination’ here. The point is that if you start by pinpointing the ending, you can trace a clear path between where you are now and where you need to get to. You can do it in either direction. You can identity way markers or milestones along the route. You could even focus on getting through the trickiest sections first, and then work through the easy bits last.

The point is, you’re planning – and we’re helping you make that planning as efficient and cost-effective as possible.

So, the short answer to the question, “do goals matter?”, is of course, yes. Goals make all the difference.

But if you want to know how and why goals matter to your wealth, read on….

Oh, what a goal!

Product focused financial planning seems a long way in the past now.

A few decades back, it was rare (though not out of the question) to see financial planning driven by personal goals, motivations, and passions, instead of product or purely financial growth.

Fast forward a generation to now, and you’ll find person-first planning, with empathy, understanding and – ultimately – trust (not product) at its centre.

We create this environment by asking our clients some simple questions. This helps us work out your financial goals – what you want to achieve in life – spread across four aspects: your money, your values, your life, and your responsibilities.

For example, it’s important to know if you want to invest to achieve better returns or pay off your mortgage, or both. Perhaps one of your goals is to retire as and when you want? Maybe start a business? And, of course, you’ll need to think about shielding your loved ones, should you experience ill health or die.

These are big questions.

In essence, we’re asking people to articulate their dreams and fears. And, in many cases, people need to think about them. So, we listen, give people time, and then discuss them in detail – so we can get to the bottom of what really matters.

This might sound like a big task, but big questions are essential to setting goals. If we can help you drill down to the exact spot you need to arrive at, we can plan the journey.

Big questions also help you winnow out the things you’re less bothered by. Take charitable giving. It’s of central importance for some – but peripheral for others.

How to set your goals

It’s often said the best goals are SMART. They should be simple, measurable, achievable, realistic and time bound.

Your wealth management goals should certainly be all of these.

But we’d particularly emphasise the importance of the A and the T, achievability, and time, because they’re closely linked. These are also the aspects of goal setting where planning takes centre stage.

For example, your mode of work might provide lumpy and inconsistent income. An achievable goal might be to save a percentage of that income every time you receive it, say, into a feeder account. You can place a time limit on that, perhaps for the next decade, or until you reach a certain birthday.

Some of our clients also like to ensure inconsistent levels of income are partially directed towards paying down debt. Such a goal can be both simple and SMART.

At a more structured level – where you start to blend aspects of money, values, life, and responsibilities – financial goals start to need a little more flexibility.

For instance, retirement plans may need tweaking if new children arrive. Business success or setbacks may require you to amend your approach to debt. Changing interest rates might push that dream house just out of reach, for now.

But being sensible, consistent, and disciplined about your goals, especially in the face of differing circumstances, can help you realise them.

There’s nothing here that’s radical, complex or product led. It is simple and straightforward.

Setting a goal and then planning your way towards it is one of the most important aspects of managing your wealth. And, like a great movie – it’s likely to be enjoyable too.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

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