6 Ways Goals-Based Planning Puts Investors First

There are many reasons people start investing. Some start by default as part of an employer 401(k) plan. Others may be following the advice of a parent or mentor or pursuing a dream of financial independence.

However, there is a reason only about 36% of Americans are on track for retirement. Life is full of surprises, and even investors with great intentions can get distracted. Long-term investment success requires consistency and discipline.

As fee-only financial advisors in the D.C. area, we’ve found that goals-based planning effectively increases our client’s staying power and long-term success. Instead of working toward a distant or nebulous goal, each part of our clients’ portfolios relates to specific, time-based, and relatable life goals.

Chapter 1

With a Goals-Based Strategy, Meaningful Life Goals are the Objectives of Investment

Whether you write them down or keep them somewhere in the back of your mind, most people have a long list of meaningful life goals. Examples include purchasing real estate, taking family vacations, saving for a comfortable retirement, purchasing a fun high-ticket item (like a jet ski or motorhome), and sending kids or grandkids to college.

Goals-based planning (GBP) involves outlining the objectives of your investments first. Instead of simply setting up a portfolio allocation based solely on time horizon and risk profile, you plan backward from each goal. 

You and your financial advisor establish a schedule for each objective and outline an investment plan to achieve them. As a result, you have a functional framework to achieve your goals and dreams.

Do-it-yourself investors often focus on a single goal, such as retirement. This approach can be less motivating day-to-day. It also leaves the other critical goals to chance.

The brilliance of goals-based investment planning is that it helps direct how much you should invest, where to invest, and when to start. Download and read our complimentary eBook: 10 Steps to a Sustainable Retirement Income.

Chapter 2

GBP Removes the Spotlight from Changing Financial Market Volatility

Far more money has been lost by investors preparing for corrections than has been lost in the corrections themselves. – Peter Lynch

It would be great if markets always went up, but the truth is that market fluctuations are normal. Financial markets routinely go through up-and-down periods. While changing financial markets and volatility can be unsettling, the best thing for any investor is to remain calm. 

Making calculated adjustments (if any) with a calm, cool head and staying the course is generally the best approach in the long term. Panic selling or emotional reactivity often limits your ability to regain losses in market recoveries.

One significant advantage for investors who use goal-based planning is they can keep their eyes on the prize during changing financial markets. Because they have specific, long-term goals connected to their investment strategy, they are better able to weather market volatility and make careful adjustments where they are needed. Our wealth management firm can help to ease your mind during what feels like troubled times.

Inflation has had a steady hand in the recent volatile market


Another way goals-based planning can help insulate you from market volatility is through a diversified and strategic asset allocation mix inside your portfolio. Many investors have a general goal of building wealth or saving for retirement. Linking your investment choices to specific long-term goals helps diversify your portfolio beyond what is typical.

You may have great success in investing in one or two markets for a while, but results shift based on global and domestic markets, events, and economic movement. A diversified investment portfolio can help you maximize potential returns while minimizing risk. Investments that thrive in different market conditions must be selected and spread out to balance risk. 

In other words, diversification helps tame the ups and downs of the market within your portfolio. As one asset performs poorly, another can make up for that loss. The key is investing in many asset classes that behave differently under various market conditions.

Chapter 3

Long-Term Targets Increase Your Financial Discipline

Time in the market is more important than timing the market. – Unknown

It is easier to make a goal than it is to keep it. Jobs like physical trainers, business coaches, and weight loss specialists wouldn’t exist if keeping on track to achieve your goals was easy. Only about 30% of Americans report their retirement savings are on track. 

Investing creates new challenges for investors tempted to chase the latest trend or exciting opportunity. Long-term goals make your investments purposeful. They help you and your advisor align each investment with your risk tolerance, increasing your chances of staying on track to reach your goals. 

If you consider all of the factors that may influence how much retirement income an individual needs and that only around 38% of Americans work with a financial advisor, the reality of this number may be much lower. Retirement seems like a distant goal until you’re pretty close to it. 

Many younger generations put off savings because they don’t fully appreciate the power of compounding or time in the market. Having long-term goals, you can stay invested, giving compounding interest the time it needs to work in your favor by growing wealth. The longer you’re invested, the more you benefit. 

By keeping in mind that you’re investing to reach set goals, you have opportunities to reinvest your profits. This means that you can reinvest your returns versus cashing them in to increase potential profit further.

Research shows that celebrating small wins helps people achieve big goals. When working toward something meaningful and achievable, it’s easier to stay on target. In this way, having several financial goals driving your investment choices helps anchor good saving and investing habits. 

Rather than a nebulous idea like “retirement,” which can seem distant to many, you are working toward a handful of meaningful milestones.

Read: Is Your Financial Discipline Impacting Your Success?

Chapter 4

Deepens the Financial Advisor and Client Relationship

Many financial advisors construct your investment portfolio based on two primary data points. They look at your risk tolerance and investment time horizon and set up a strategy.

A goal-based planning approach deepens the client relationship by exploring your meaningful life goals. Rather than diving straight into your financial details, you and your advisor spend time on detailed questions about your aspirations for your family, future, and legacy. Asking the right questions and working with clients on a deeper, personalized level is vital in the comprehensive financial planning process.

Take a look at the Brown | Miller three-step holistic wealth management process: Discover. Design. Deliver.

Developing a deeper financial advisor and client relationship has many advantages. Successful financial planning is a long-term, bottomless process. You are more likely to feel comfortable discussing questions, life changes, and concerns with an advisor who has taken the time to get to know you as an individual. 

Our team believes that the power of a well-designed financial plan with compounding capital can profoundly improve the lives of our clients, families, and even society. Ultimately, this provides peace of mind in retirement, fuels philanthropy and charity, helps educate future generations, and protects loved ones from life’s uncertainties.

Chapter 5

No Blanket Strategy Exists – GBP Requires Customized Financial Planning

While it may be nice to show up at a McDonald’s counter anywhere in the world and receive the exact same product, you do not want a cookie-cutter financial plan. Your life circumstances and goals are individual to you, and you need customized financial planning to support them. Customized financial planning is personalized in several ways, including:

  • It begins with your life goals
  • It organizes your financial life based on the precise circumstances you face
  • It is specific and targeted
  • It proactively anticipates your needs
  • It provides you with the information you need to make sound decisions
  • It is designed to help you achieve your goals
  • It is a process of continuous improvement

Goals-based planning is based on what you want to achieve and cannot be shoved into a blanket strategy. A CERTIFIED FINANCIAL PLANNER™ in the D.C. area is equipped with the tools and knowledge to sift through your life details and help construct a customized financial plan personalized to you.

Chapter 6

Can Include Short, Medium, and Long-Term Financial Goals

When you think of financial planning or wealth management, you may first think of retirement planning or investment management. These are both important, but goals-based planning brings a lot more into the equation.

Incorporating goals with different time horizons into your plan helps keep you on track and motivated. It can take years or decades to enjoy the fruits of some long-term financial goals, so shorter-term goals allow you to reap the benefits of your efforts sooner. The satisfaction of achievement helps keep you motivated and engaged.

Since goals-based planning replaces one-size-fits-all approaches with a highly personalized and tailored wealth plan, this plan can be organized in several valuable ways. One is by the time frame in terms of short, medium, and long-term financial goals. Another is importance. 

As you and your CERTIFIED FINANCIAL PLANNER™ in the D.C. area go over your objectives, you may organize them into three overarching categories for clarity and help you prioritize. These include essential goals or needs, essential goals that are desired but not required, and hopes or wants that you would like to see in a best-case scenario.

Chapter 7

Can Goals-Based Planning Make Me More Successful?

As a systematic approach that accounts for all of your objectives and obligations, goals-based planning integrates your financial plan with everything in life that is important to you. During life’s busy periods or as circumstances change, it helps you stay on top of your financial goals. Many people get distracted from their objectives or buried under unexpected events, but a goals-based plan acts as a guard rail to keep you moving forward in the direction you want to go.

Many people are successful without a financial plan. However, just as a business plan doubles the chances of success, a goals-based financial plan improves your odds of reaching and exceeding your goals. On that note, business owners should choose to work with a financial advisor who specializes in working with entrepreneurs.

In a holistic planning approach, the goals-based process is intensive and iterative. Each year and each meeting with your advisor brings you greater clarity and refinement. Since you cover all aspects of your financial life, from wealth management to tax and insurance planning, you have a big-picture, top-down understanding of where you are.

As a financial planning firm in the Washington D.C area, we find that the process of implementing clients’ goals-based plans helps them realize new goals and identify better pathways to achieve them. It opens up possibilities in their lives because a well-defined destination makes navigation easier.

Chapter 8

Goals-Based Planning is Customized to You

Goals-based planning is a more customized, more personal, more engaged approach. It embraces everything important to you. Instead of pursuing one end-all, be-all objective you may or may not ever reach, you define multiple goals and organize them according to time horizon and importance.

If you have any questions about how this process works or would like a second opinion portfolio review, feel free to contact our CERTIFIED FINANCIAL PLANNERs™.

No matter who you work with, work with someone who puts you first. Fee-only financial planners who act as fiduciaries operate in the best interests of the individuals and families they serve. 

Our  Brown | Miller team is here to map out your investments, savings, insurance coverage, budget, debt repayment plan, and tax planning needs with your assistance with a white-glove approach. A watchful eye will be focused on spotting opportunities in the markets, so you don’t have to. Work with our financial planners to increase your confidence and chances of growing your wealth and reaching your financial goals.

Disclaimer: This article is intended for informational purposes only, and not to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone.  Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs, and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector, or the markets generally.  

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