As financial planners we spend a lot of time helping our clients set goals and reduce them to writing. In fact, that is one of the standards of professional conduct imposed by the Certified Financial Planners Board of Standards. Nearly every client comes to us with a long range goal in mind i.e. retire with enough to live on into old age, pay for college, get out of debt, etc. We have to pause to ask if the goals well-defined? Usually they aren’t.
In order to become better equipped to help our clients set goals, I attended Michael Hyatt’s Best Year Ever Live Event earlier this year and have subsequently participated in his Activation Workshops to build on that experience. I just returned from the second of those workshops designed to assess progress made in the quarter just ended and to refine the goals for next quarter. In the program, Michael presented a method of “How to Set Goals” and has graciously granted me permission to share the method with you here. You can learn more about Michael and his work at michaelhyatt.com
Step #1: Select a life domain. Ask yourself, where do I want to make progress? These could be in the realm of Being (spiritual, intellectual, emotional, physical); Relating (marital, parental, social); or Doing (vocational, avocational, financial).
Step #2: State an aspiration. An aspiration is simply an expression of a desire. Usually it starts with the words, “I want . . .” Unfortunately, we see many clients starting and stopping at this point and the goal remains simply a wish. Aspirations are important in that our best goals tap into our deepest desires, but stopping here cuts the legs out from under our goals. As financial planners, we listen for critiques that each client places on his or her own financial management for clues related to finding the aspirations.
Step #3: Decide if it is an Achievement or a Habit Goal. Achievement goals have a well-defined target that will be easily measured when you get there. Retire at age x. Accumulate $x by age y. We usually default to achievement goals but we really need to ask whether a habit goal will best serve the outcome we desire. A habit goal is used when the aspiration is rather vague and / or hard to measure. A habit goal can often become a means to accomplishing an achievement goal. For example, one of my goals is to remain healthy–an achievement goal that will elude me if I don’t have a good habit of exercising every day and getting 7 – 8 hours of sleep each night. So one of my 2017 habit goals is “Exercise 30 minutes a day, 5 days a week beginning on January 23, 2017, for 26 weeks.” (I figured it would take that long to establish it as a habit given my reluctance to exercise.) Another is “Get to bed at a time that will provide 7 hours of sleep each night starting on January 23, 2017 for 13 weeks.” I was able to mark these off this quarter because those habits are now firmly installed.
Step #4: Understand the characteristics of each type. Michael has developed his own variation of the SMART goal (I learned SMART goals 40 years ago in the Army). He has suggested that both Habit and Achievement Goals need to be SMARTER: Specific, Measurable, Actionable, Risky, Time-Keyed, Exciting, and Relevant. “Risky?” you might ask. He advises that our goals should be in our discomfort zone if we are to make significant progress in the chosen area of life. Our job as financial planners is often to help clients stay out of their delusional zone. Notice that achievement goals and habit goals have different time-keys. Achievement goals have a deadline whereas habit goals have a start date, habit frequency, time trigger, and streak target.
Step #5: Write the goal using the appropriate template. Start with a verb (action), include the words that make it specific, measurable, risky and exciting, and end with by _________________ (the date). An example would be Retire with no reduction in living standard by age 65. A habit goal will also begin with a verb (the action) followed by the terms that make it measurable, risky, exciting, and specific. which are in turn followed by the habit frequency , time trigger, starting date and streak target. An example might be Exercise (the action) every morning for at least 30 minutes, 5 days a week, (the measureable and exciting part) starting on July 18, (start date) for 26 weeks (the streak length which is the time that I think it will take to install the habit).
Often our financial planning recommendations are actually the short term goals that will lead toward the accomplishment of long term goals. For example, the planner might calculate and advise the client to spend not more than $X in order to reach the long term goal of retirement at a certain age.
If you haven’t set your goals using such framework, perhaps your next goal should be “Write my goals using a SMARTER framework by the end of this month. Drop down and leave a comment or question.
July 18, 2017