Goal Setting

Goals are fundamental to planning. Without them, there is nothing to plan for. Yet, goal-setting doesn’t always receive the attention it deserves.

Clarifying and establishing goals is the first step in the financial planning process. Practice Standard 200-1 of the CFP® Standards of Professional Conduct states:

The financial planning practitioner and the client shall mutually define the client’s personal and financial goals, needs and priorities that are relevant to the scope of the engagement before any recommendation is made and/or implemented.

Notwithstanding the primacy of defining financial goals, the processes and methods of goal setting may vary among financial planners. Most often, goals are established around traditional financial planning subject areas: retirement, risk management and insurance, education funding, investment management, estate planning and taxes. The traditional approach to goal-setting typically focuses on establishing a time-frame and quantifying the value of the goal.

While the traditional approach to goal-setting has served the profession and the public well, it has a major drawback: it doesn’t address the “why” question. “Why is this goal important to you?” For example, it is generally taken for granted that the goal of financial independence in retirement is to avoid running out of money before you run out of breath. Obviously, nobody wants to outlive their money. The real question in retirement planning in almost all cases, however, is: what do you want to do with your life in retirement?

Looking beyond the obvious in establishing meaningful goals is essential. Too often plans that are based on narrowly defined traditional planning objectives end-up not being implemented. Why? Because they are not motivating. You must be motivated to spend the time and money and to make the sacrifices needed to implement your financial plan. And, that motivation is only likely to be forthcoming when the plan is based on goals that are connected to your unique core values.

Core Values

Goals, like other choices in life, reflect our core values. There is very little that we do, or don’t do, that does not implicitly or explicitly reflect our core values. It only makes sense, then, to clarify your core values before we establish your goals.

Core values are the guiding principles that dictate our behavior and action. They form the framework that gives us purpose and helps us distinguish right from wrong, important from unimportant, and meaningful from unmeaningful. In short, our core values help us express who we are and what we stand for.

If you are unaware of, or become disconnected from your core values, you are liable to end-up acting impulsively rather than deliberately. This applies to all aspects of life, including:

  • personal and work behaviors
  • your interactions with family, friends and co-workers
  • your decision-making processes

This is why it is so important to know what you value, why you value it and what precedence it takes in your life.

What are Your Core Values?

Your core values form the general expression of what is most important for you. Value expresses the worth of something; when we assign a higher value to something, it is worth more. Your core values express what you value most highly. They are like categories for all your preferences in life. Values are formed starting in early childhood and are later consciously re-evaluated and can therefore be changed.

Core values generally operate in the background. They influence everything you do but it isn’t easy to define them. You just know intuitively what you like and dislike and decide accordingly.


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