As a product expert, he has extensive experience working directly with both retail and enterprise partners in our tools. He enjoys taking feedback from our partners to continue Advicent's high standard of financial planning software. Drew graduated with his MBA in 2014.
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A new year typically means new goals for both financial advisors and their clients. Whether setting your own goals for your practice or helping clients set their financial goals, goal setting should meaningful. A great system for goal setting is the SMART goal system. This system stems from business guru Peter Drucker’s management by objectives concept, but has been written by many subsequent authors as well. The acronym SMART defines sound goals as those which are specific, measurable, achievable, relevant, and time bound. Each of these individual criterion work together to create goals that make sense.
Specificity in goals is important because it leads to the goal-setter aiming to improve upon a targeted area. You or your clients may want to “do better” at something; however, without specificity, it is unclear on exactly what to improve. This lack of direction can make knowing how to accomplish the goal quite difficult.
Measurable goals are also key. With a known target in mind such as “save an additional $1,000 this year” or “increase AUM by five percent,” the goal-setter can track their progress over time and make adjustments as necessary. If goals are not measurable, success cannot be tracked. Additionally, the adjustments necessary to achieve success can become a bit of a guessing game when the criteria for success is not well-defined.
The achievable portion of SMART goals implies that goals should be realistic and within reach. While lofty goals are not negative, setting goals that are completely out of reach only sets you up for failure. Setting goals that are challenging but reasonable leads to a sense of accomplishment when obstacles have been overcome and the goal is met.
This piece might seem obvious, but goals should always be relevant. To an extent, it might seem self-evident — do not set a goal about which you do not care. There are also other additional factors to consider, however, about whether a goal is relevant or not. For example, the goal might seem worth pursuing because you want to achieve it, but now might not be the right time to do so. Additionally, consider whether or not the goal aligns with other goals you have set. Considering the relevancy of a goal really forces you—or the client you are assisting—to think about what needs to be achieved. What purpose does the goal serve, and is it truly important after deeper thought?
Similar to measurability, setting a time constraint for a goal makes it easier to track and adjust. It also forces the goal-setter to take action towards accomplishing the goal, rather than continuously pushing it to the side. If the goal is unsuccessful once the time period has passed, the goal-setter will need to reassess the original goal and refine the expectations to be more achievable and/or relevant. This could also be true if the goal is successful but was easier than expected. Either way, a set time period for achievement helps to set better goals in the future. Periodically reviewing and reassessing how previous goals went will make you ultimately better at goal planning, tracking, and achieving.
Tying it all together
When all these pieces are considered, the goals you set will be clearer, more meaningful, and trackable. This system forces action on meeting the goals or an admission of inaction as the goals are periodically reviewed. Whether goals are successful or unsuccessful, the SMART system forces us all to think more deeply about how we set goals, when we might accomplish them, whether they were truly successful, and how to go about setting new goals in the future.
Click here to learn more about how financial planning tools from Advicent can help you create a more collaborative relationship with clients to help them track and achieve their goals.