Episode 13 – When Financial Goals Aren’t Enough
Financial advisors typically focus on helping clients set goals. It’s easy to see why — it’s fun for clients to check off their accomplished goals, and it’s rewarding for advisors to help clients reach their milestones.
However, Danielle Howard believes that goal setting isn’t enough.
In this episode, Danielle explains why dealing with life transitions is where the true financial life planning happens. She discusses:
● Why advisors do their clients a disservice by only focusing on the fun aspects of life
● How planning for transitions differs from goal setting
● Life transitions people might not consider when envisioning their retirement
● Which character assets bolster people the most during times of change
Join Danielle now and learn how you can start planning for whatever life throws your way![00:00:02] Welcome to the Wealth Done Differently – Retirement Podcast. Danielle Howard – A Certified Financial Planner ™ shares insight into the financial tools, techniques and temperaments needed make the most of your retirement dollars and relationships. Danielle bridges the gap between Wall Street and Main Street, bringing complex financial topics down to earth. Danielle will educate and inspire you as you define and refine your version of prosperity. [00:00:37] Hello and welcome to the Wealth Done Differently Retirement Podcast with Danielle Howard, a Certified Financial Planner. How are you Danielle. [00:00:44] I’m well thank you Aric. [00:00:45] Great. The title is when financial goals aren’t enough for today’s podcast. What brought this idea on. [00:00:52] Well when you think about a discussion with a traditional financial adviser, what do you think their main focus is on? They would like me to give them as much money as possible so that I will have will they say so I’ll have as much money as possible in the future. [00:01:11] But yeah we’ll see. That’s kind of what I get from it. Do they traditionally talk about let’s set some goals. [00:01:20] Yep it’s usually about you know what kind of retirement do you want to live and how much money do you want in retirement. That’s a difficult question when you’re 30. And then even when you’re 40 and things change in that decade. And, then 40 to 50 that changes. So yeah the one time asking is not enough to me. [00:01:35] Right. Well I was trained in that in that traditional financial world and it was about OK let’s let’s just set your goals. What do you want to do with this chunk of money. You know you may have a goal of retirement someday, you may want to buy a new car, you may want to send your kids to college, you may want that vacation home. And goals are traditionally the fun stuff and that’s exciting to do. [00:02:04] And it’s very quantifiable in many ways so you know how liquid does the investment need to be for you to accomplish that goal. You know we take into to all these different considerations. What is your risk tolerance. What would be the impact of income taxes. Do you want to use qualified plans. So while there’s a lot of variables within setting goals that you know it is it’s quantifiable. But with the goals it’s the fun stuff. And so we want to crunch the numbers. [00:02:38] We want to look at what we call the SMART goals and you know what those are specific measurable attainable realistic time oriented. [00:02:48] Exactly. So for the quantifiable part that’s that’s pretty doable. We can take a look at those and we can say, All right. How much money do I need to purchase that vehicle in 10 years, or how much do I need to send my children to college or to take that trip or to purchase that retirement home. You know these are all things that we can really add, you know, inflation factors and get an asset allocation component too. And tax implications, and we can really quantify and crunch the numbers. Great. Then there is what we call the qualitative side. And we want to say yes we need to look at the softer side of goal setting. And there are smart goals around that. We want to look at making your goals significant. So discern if it is a sole need or just that ego desire that again our media and our culture is pushing on to us to keep up with the Joneses and we don’t want to you know come close to to that we need to make sure it is something that is really going to feed our soul. We need to make our goals meaningful. Do they align with your values, not on just the trivial discourses or what your neighbors are doing. Are your goals attractive. Have you created that positive image that that draws you towards them and you have clarity and conviction about it and are your goals rewarding. You’ve always got to weigh the cost and the benefit. And sometimes there’s you know there’s always going to be risk and commitment. Is it worth it for you to now have these goals as one of your quests. And then timely. Is the life season right. Should there be a set date for completion or is it an ongoing ongoing aspect of your life. So with goal setting you need that quantitative side which we talked about that specific measurable attainable realistic tangible crunched the numbers. Figure out how to make it happen and then that softer side the qualitative. Are they significant meaningful attractive rewarding and timely. But setting goals is not enough. [00:05:15] I want to go back to the second iteration of smart goals. Are they rewarding; the R specifically. It kind of sparked me. Rewarding means a lot of different things to different people right. [00:05:27] Yes. And I think it’s up to each person to decide what their idea of rewarding is. This is what creating your version of true prosperity you’re creating your version of True Wealth. This one in last week’s podcast where we talked about the Self-Determination Theory and we want to look at Autonomy. It’s about what is important to you what is your moral directives what is your value system. It’s not up to me as a financial adviser to say oh you’re supposed to retire at 65 and draw the line in the sand. Or it’s not up to the media to say you’re supposed to be sitting in a bathtub high on a hill toasting wine goblets with your partner. You know you want to be in charge of your version of rewarding. [00:06:19] Absolutely. And you said setting goals is not enough. So what did you mean by that. [00:06:24] Well again I think our industry has traditionally that’s that’s been an easy thing to do because it is quantifiable. And we can draw that line in the sand and we could cross over and go oh we accomplished it check it off the list. However your financial life is not about just goals. But isn’t that much funner to talk about the good stuff the maybe traditional retirement the vacation the kids weddings the second home. That’s the fun stuff. But guess what, that’s not real life. And transitions, dealing with life transitions, is where the true financial life planning really the rubber hits the road and what people need to constantly be you know making those subtle shifts in their financial life as they deal with real life transitions. So what I look at with transitions is we can look at work transitions financial transitions family transitions health and what might some of those be. Where a financial goal traditionally may have been, Oh let’s look at what we need to build up that retirement bucket. But in actuality what happens when you lose a job five years before you are planning to retire? Or your job got restructured? Or you own your own business and you decide you want to sell or close it, maybe even transfer it to a family member or your business partner passes away. These are the types of things that are life transitions that aren’t necessarily goal, you know, quantifiable. And so I think the financial services industry does a disservice when that is the only component we look at. Well let’s just plan for your goals. I think it is incumbent on us as true financial life advisers to walk people through you know this is life and we want to be successful in financially preparing you for life transitions. So we don’t have to repair your life after something happens. As we look at you know other types of transitions out there you know it may be a huge market correction that we need to contend with. You may be wanting to look at re-evaluating that investment philosophy or dealing with debt concerns or you received an inheritance or or a financial windfall or you’re looking at making a huge change in your life and need the financial pieces put together to help you do that. Family life transitions that aren’t goals. Nobody has a goal of being divorced or they don’t have a goal of losing a life partner or of helping a parent you know deal with the aging process or you know a life transition with dealing with a child or a grandchild with special needs. You know these are the things that life just throws at us and we need to walk alongside our clients in order to make the financial iterations and the financial shifts that need to be done in order to help them get through that. So I do believe that there’s still that that quantitative side of dealing with life transitions. And this is where we want people to feel competent in knowing what they have and knowing how their financial tools work. Knowing what would be the best financial tool to use in any given finance you know any transition that you’re going to encounter out there and to look at how to use those tools in any given transition you know there’s definitely certain tools that you want to use for certain goals. And there’s going to be certain tools that may serve you better in different life transitions. [00:10:43] I think that like you said earlier the media commercialized environments they sell us goals like it seems to me like a little kid who has the the calendar for December and they’re just putting an X on every day working up until Christmas. Well Christmas never changes it’s always on the 25th. It’s it’s coming. We know it’s going to be there. It’s not going to waiver. It’s not going to change and that’s what we’re. That’s how we’re sold goals but that’s just not true. Like you said major things happen along the way. On those certain dates and that gold can change or maybe it’s you know needs to be eliminated because you have to re-evaluate a whole lot. [00:11:24] Right. Yeah and the whole idea of of life transitions you know many people will you know focus on preparing for retirement and look at the you know Dell Web version of creating you know let’s look at what this life of leisure is. They don’t want to look at the reality of Boy, we need to prepare for the life transition of of long term care. Or how do I deal with you know my aging when I move more towards those no-go years. [00:11:57] And the competency that is going to come into play and how do I protect myself. What do I need to do to look at my estate plan and all the bells and whistles with creating you know, do I want to create a legacy, where do I want to how do I want to have these conversations with family members. I think it is incumbent on financial advisers to have these tough conversations with people. It’s been much easier to just focus on the goal of let’s get you your vacation home, and let me sit on the beach with you when your toasting, you know, your successful retirement. I can’t tell you that you know the way most financial services commercials leave a really bad taste in my mouth. [00:12:44] So. Yeah I get it. So how do we help people prepare for using goals in an appropriate way. [00:12:51] I think we go back to looking at both the quantifiable aspect of it and that qualitative side. You know we review the two different types of smart goals. Yes, you need to crunch your numbers. Yes, you need to know what is what is realistic and attainable and timely, but also meaningful rewarding and and all of all of those pieces. So expand on your idea of what a goal should be. [00:13:18] Look at it deeper within yourself. It is not about just having that pile of money or that quest for a singular goal about having enough running that line in the sand. We need to help people utilize their money in a way to address that all of the changing seasons that you’re going to encounter with goals we need to crunch the numbers we need to make them quantifiably smart specific measurable attainable realistic and tangible. But those goals are going to be so much more meaningful to you, again if we look into that softer side that significance meaningful attractive rewarding and timely. That’s the goal side. Yes let’s look at goals and let’s figure out how to get there. Then we also need to deal with the transitions. [00:14:15] So how do we help the client through those transitions. Knowing the information that you just presented. [00:14:21] Bottom line is to know that it isn’t a goal it’s never going to be reached that it is always elusive in nature and that’s always changing. And every day is going to be different. It’s going to help to know that you’ve got to make intentional choices day to day. You can’t just set your investments and forget it. You can’t. Not only with your investments but whether it’s life insurance or home equity or what you’ve got in savings or your retirement plans or your businesses you need to be intentional about knowing what you have, knowing how to use it, and knowing that you’re in charge of this you are ultimately in charge. Yes, you can hire good financial advisers that are going to walk alongside you. You can build relationships with trusted advisers and family members. [00:15:15] And I want you to feel competent that you know what you have that you’re educated about how you how you use it and that you know that any life transition you are going to contend with is going to be surmountable. That we’re going to get through it. I think it’s really important that people not only know their numbers but that they know themselves. This is where we look at you know your attitudes your personality your behaviors and how it’s reflected in your financial life. Your character assets I think are hugely impactful when it comes to life transitions. When we look at character assets and in retirement and when it comes to your life transitions this gets back to that self determination theory. Are you a victim of circumstance or do you want to be victorious again no matter what is happening. Are you resourceful. Are you resilient. Are you creative. Are your relational loyal compassionate forgiving. That’s a big one. Are you forgiving when life transitions happens. Forgiveness is. Wow that’s that’s a big one. [00:16:32] Are you courageous in addition to your financial assets, these character assets are going to really support you and undergird you in getting through these life transitions. And surrounding yourself with people that that are like minded will build those characteristics in each each person. Yeah. You know you will thrive when your tribe is cheering you on and rooting for you and holding you accountable and maybe pushing you a little bit to become your next best self. [00:17:05] Absolutely the thing that keeps running in my head as you’re talking about this is it really goes back to being proactive instead of reactive. That’s what that’s what it feels like to me. Is that about right. [00:17:17] Yeah. [00:17:17] You know again we want to prepare. So you don’t have to repair. [00:17:22] I [00:17:22] haven’t heard that one. I like that one. I stole that from Mitch Anthony. [00:17:27] I [00:17:27] won’t tell him. All right. So where do we go from here then. [00:17:33] I think we need to you know we need to start shifting our perspective. We need to look at that context of how we look at our money in this season of life. We need to change our conversations. Yeah. Encourage people to get a copy of my monetary manifesto and to take a look at our eight week retirement course on our Website Danielle Howard number four letter U dot com. If it is appropriate in your situation to maybe come in and talk to us personally about what your personal situation is. We would be more than happy to chat with you about that. You know if you’re working with a financial adviser that you you know have a good relationship with, you bring up the topic of life transitions. Ask them. You know, how should they start looking at these these transitions. I really appreciate the work you’ve done in helping me reach my goals. But I think it’s a little bit more than that. I think we have to be having conversations with our family members. It’s one thing to talk about you know yeah you know looking forward to you come visiting us in our retirement home. But how about the conversation around you know what’s going to happen to you mom and dad as you get older and let’s have a Where do you want to be living. How do you want to maintain your independence. And you know we want to keep you safe and be willing to enter into those tougher conversations. I think above all we just we need to make a commitment as a as a culture as a society to say that we want to do it differently. [00:19:14] We want to do our dollars differently because what traditionally has been the way of the world is is not working. And there’s a lot of angst. There’s a lot of really really sad emotions around what’s playing out in our in our world. And I want to be a part of the solution. [00:19:34] Part of change would be great. Yeah. Danielle one of the things that you just brought up is always always a difficult point. Not always, but for many many people a difficult point, and that’s the conversation with family whether it’s children initiating a conversation with their parents or parents having to have that conversation with their children. Do you have resources or can you point us in a direction or the listeners in a direction to get some good resources to start that conversation because it’s one of the hardest things. [00:20:02] Aric, I think it’s so important that people have these conversations. And it is really really hard to know where to even start. In our office, we will encourage our clients to bring family members in and the sooner than later because the more that you can make this a conversation that is about something more than the money. And you can start asking questions and getting clarity on what’s important as a family. Again, clarifying those values. It will play out well over the long run. So we definitely have those conversations multifamily multigenerational family conversations. There are a lot of resources out there with family meetings. We’ve done several different types of family meetings whether it’s with parent and children or with children and parents. But the idea sometimes you just need that third person. Absolutely. Whether it’s with a couple or family that kind of I can set the stage ask some non-threatening questions and help lay the foundation for a peaceful way a safe space to be entering into these conversations. [00:21:23] Yeah there’s two things that are so important. Number one there’s going to be a lot of emotion involved and that’s that having that third party really helps. And then you as the professional being able to ask the questions or facilitate a few questions that neither party may know to ask the other one or they don’t come up or they don’t think about it as being so important. And I think you have a bunch of those questions like you were talking about today with the goals and what maybe the parents want or the grandparents want for the future and some of their finances to go to or what their favorite charities are that they really want to help out and those can be eye opening revelations for kids or grandkids that didn’t know it. [00:22:02] Yes and many times I will also allow myself to be the bad guy. Good. We these conversations and many times a parent will say I don’t know how to talk to my kids about this as well. You can. You can blame me. You know you can put it on your financial adviser. So I think it’s just important that people have an advocate somebody who is walking alongside them to look at life transitions to set appropriate goals and to walk this path with you and to know that you’re not alone because the world of money is getting scarier by the day. [00:22:37] Yeah absolutely. And this will help them do their dollars differently like you said. [00:22:41] Yes. So download a copy of the monetary manifesto and sign up for the eight week retirement e-course. I think those those two pieces right there would be a tremendous value and opportunity for growth. [00:22:57] I couldn’t agree more. I encourage everybody to check that out as soon as he can. Danielle thank you so much for your time today. [00:23:03] You’re quite welcome Aric. [00:23:05] And thank you everyone for listening to today’s podcast with Danielle Howard. If you have not subscribe to the podcast yet please click subscribe now button below. This way when Danielle comes out with a new podcast it’ll show up directly on your listening device. This makes it much easier to share these podcasts with your friends and family. Thank you again for listening. For everyone at Well Done Differently Retirement, this is Aric Johnson reminding you to live your best day every day. We’ll see you next time. [00:23:30] Thank you for listening to the Wealth Done Differently – Retirement Podcast. Click the subscribe button below to be notified when new episodes become available. The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Wealth By Design, LLC.
The Content has been made available for informational and educational purposes only. The Content is not intended to be a substitute for professional investing advice. Always seek the advice of your financial advisor or other qualified service provider with any questions you may have regarding your investment planning. Danielle Howard, Certified Financial Planner ™ is an Investment Advisor Representative of Cambridge Investment Research Advisors, a Registered Investment Advisor. Securities offered through Cambridge Investment Research Inc., a Broker/Dealer, Member FINRA/SIPC. Cambridge and Wealth By Design, LLC. are not affiliated.