Some advisers will agree “Smart” goals — goals that are specific, measurable, achievable, relevant and time-based. For example, rather than having “I want to buy my first home” as the goal, try making it “I want to save £25,000 in the next five years so I can buy my first home”.
2. Personalise financial goals
Personalising goals is a really important step and should not be overlooked as it makes them more tangible and increases motivation.
Ask questions like: what does achieving the goal really mean for them? What does it allow them to do? Why is it important to them? What would success look like?
By approaching clients’ goals in this way, you are forced to dig a little deeper and add extra detail that will really help when you come to building a financial plan to make it all happen. It makes the financial goals real and personal for each client.
3. Prioritising financial goals
After setting financial goals, it is important to prioritise them based on their importance and urgency. This helps to ensure that the most critical goals are addressed first and ensures that resources are allocated effectively, so that each goal receives the attention it deserves.
As an adviser, it is important to be prepared to challenge which financial goals clients feel are most important.
4. Defining financial goals
Once you have established the main priorities, the specific goals should be defined in greater detail.
Advisers often use planning tools to define these. It includes determining the amounts needed to achieve the goal in the expected timeline, either through regular contributions or the growth required on existing investments already made.
It should also include an analysis of the level of risk the client is willing to take and whether the financial goals are realistic. This information is used to create a plan to achieve each goal.
5. Creating and agreeing an action plan
The next step is to create an action plan to achieve each goal. This involves determining the amount of money that needs to be saved, the investment strategies that will be used, and the timeline for achieving each goal.
It is important to make sure that the action plan is realistic and achievable, and that it considers the individual's risk tolerance. It is also important to link the action plan to the client’s personal objectives as this helps get them to buy into the plan.
6. Monitoring progress and revising goals
Goal-based planning requires ongoing monitoring of progress towards achieving each goal. This helps to ensure that adjustments can be made as needed to keep the plan on track.
If circumstances change, goals may need to be revised — adjusting the timeline for achieving a goal or changing the amount of money that needs to be saved, for example.
