Is What You "See" What You Get?

"Does goal setting work? Yes, but not the way most people seem to understand it. In my experience, the real value of defining desired futures is not so much in the world the describe, but the change in perception the process of setting goals fosters.  David Allen, Productivity Coach and founder of Getting Things Done (GTD) from is weekly email "Productive Living"  Courtesy of Google Images

I couldn't agree more. 

Wealth Management takes on many forms. For most of the profession and the public, (unfortunately) it's an effort to figure out why you should buy something and exactly what that purchase should be. It's a process that has at it's core when applied in this way, something that you need. Implicit in that mode of operation is the embedded notion that a product is going to solve your problems. "Purchase this and it'll set you free!"  Really? If buying financial products solved the problem, we'd have a lot more 1%'ers than we do. You see, the 1%'ers are the people who built the stuff that you should buy. You purchasing their stuff has made them wealthy, not you. 

When you can focus your energies working with someone who relies on you to enunciate the life that will make you happiest; then you are the center of the process. "What would you do differently today if money weren't an object?" There's nothing to buy...only the belief in change. 

Many will say that it does little good to ruminate in wishful thinking of that sort. And yet, we are, what we think. When we focus on life as we want it to be a subtle change takes place; we begin to open ourselves to the possibility that our dreams can in fact be our reality. Maybe not immediately, but over time. If you are what you think (and you are) then thinking that you're destined for greatness is going to attract a lot more positive outcomes than any of your other options. I don't know about you, but contrasting buying something and feeling "insured" as opposed to "on my way to making my dreams a reality" I'm voting for my dreams. 

"The reason for long-term goals is the permission they give us to identify with the greatest value we can so it changes our filtered perceptions. The future never shows up (have you noticed?-- it's always today!)"

That's another quote from David Allen who was talking specifically about Getting Things Done. 

As am I.  

The Compass or the Map

Over the last few years I've read a few of Seth Godin's books and I receive his blog feed just about every day. He's one of the bloggers that I tend to read just about everything he writes and as with his books, I find Seth's perspective on things to be interesting and intriguing. 

On February 22nd, his blog titled "The map has been replaced by the compass" (you can read that blog as well as the other "February" bloggings by Seth.) another interesting paralell has been drawn between whatever inspired his blog on that day and the wealth management process. 

In that blog, he writes..."The compass, on the other hand, is more important then ever. If you don't know which direction you're going, how will you know when you're off course?

And yet...

And yet we spend most of our time learning (or teaching) the map, yesterday's map, while we're anxious and afraid to spend any time at all calibrating our compass."

In the world of personal finance there also exists both map and compass.

And, likewise, maps while inferior at the job tend to win out.

One word of caution; if your map is getting all your attention that's a problem you need to work at fixing. 

Better Progress, Better Goals

As the New Year gets started, it'll be time once again for setting some goals. Some of those goals will be personal ones, exercise more, lose some weight, etc. Some of those goals will be financial ones too. You can increase your chances of not reaching a goal simply by failing to outline it in defined and measurable terms. If you’d like to “sort of” meet that financial goal looming on the horizon, paying for your oldest child’s college or getting that wedding money set aside, do what most people do; leave it vague and murky.  Or, try another way.

We work with people all the time on the correct way to set goals. Goals need to be defined, specifically. You need to be able to state in specific terms how much you’re going to need, how much you ‘ve saved and/or can save, and how long you have to go until that goal needs to be met. Sending your oldest to college isn’t the same as: “I need to have $50,000 set aside eight years from now and I’ve already got about $7,000 and can save another $100-$200 per month.” Typically, clients come to us with the former rather than that latter. It's our job to change how you look at your goals. 

With a specific goal in mind, you’ve got clarity about what must be done. It’s a transformative process and takes what had only really be a wish and converts it to a goal. Now progress can be measured, you can tell if you’re on or off track or not and you can adjust along the way. With specific goals you have to commit to an action and only once you’ve committed to an action, can you tell how you’re doing. Absent specifically stating goals the end result is likely to be our continued ability to avoid confronting our lack of progress. After all, why bother assessing progress when that progress can’t possibly be measured?

There’s a lot to be said for knowing where you are relative to a goal.  Should you continue to put away money to reach it or has the market given you enough return that funding can be scaled back? Tuition went up? Not a problem you can tell how much you have to adjust either your return on your money, your funding or both. As advisors, one of our primary responsiblities is to monitor progress towards your goals in very specific terms. Appropriate goal setting brings you both comfort and clarity because the effort is defined in measurable terms.

A good example is paying for college costs. Absent specific goals, parents tend to avoid the matter entirely or only put the bare minimum towards paying tuition costs. That’s why a recognized expert has said that “college funding isn’t a college problem, it’s a retirement problem” because lacking the proper context; many parents raid their retirement plan to pay for college. And, they do so at the worst possible time, when markets are down or when they’re relatively close to retirement age.  Missing one importatn goal in order to pay for another can be avoided with the clarity that comes with proper goal setting.

So get a pad and something to write with and list each of the financial goals that loom on the horizon and ask yourself the simple questions that will make the biggest difference:

1.      How much will I need
2.      How much do I have
3.      How much can I save
4.      When do I need it by

That’s how to tackle your goals head-on instead of just hoping for the right outcome.