2020 Hindsight

The Financial Planning Association recently announced Samantha Lamas, Ryan O. Murphy, Ph.D. and Ray Sin, Ph.D. as the recipients of the 2020 Montgomery-Warschauer Award for “Goals-Based Financial Planning: How Simple Lists Can Overcome Cognitive Blind Spots,” published in the July 2019 issue of the Journal of Financial Planning.

As part of their research, the team asked a group of investors to identify and prioritize their financial goals. Then, after being given a checklist of 17 common financial objectives to look over, they were asked to revisit their own goals. According to the report, 73% of respondents changed one or more of their top three goals after reviewing the checklist. 26% of the total respondents actually changed their top financial goal.

The researchers saw these results as analogous to what happens when you look at a restaurant menu and find something you had no idea you were hungry for. Call it the power of suggestion or simply that the items on the list reminded them of a goal that was drifting around in the back of their minds.

Although the study was published a year ago. if there was ever a year when financial advisors and planners should be helping their clients revisit their personal and financial goals, 2020 is that year! Here are just three reasons.

  • 2020 has taught us what we really need to live on.

Before the lockdown, many clients had a tough time defining and quantifying their needs, wants and wishes. But now they have a lot more clarity about what they have to have versus what they’d like to have. Having actual numbers to work with makes planning a whole lot easier and better.

  • 2020 has given us a different take on what is most important to us, and some have learned that it isn’t always about money.

Enforced family separations due to no-visitor policies at hospitals and senior living centers, severely restricted entertainment options, and the inability to hold weddings, funerals or even religious services have given us a new appreciation of the importance of being together with loved ones.

  • 2020 has given many a renewed interest in philanthropic engagement and giving.

The financial impact of COVID in the form of furloughs, unemployment and business failures for a broad range of sectors in our economy has led many to look for opportunities to help. One study found that during the first six months of 2020, COVID-19 funding was more than 16 times the funding for Hurricanes Harvey, Irma, Maria, and Dorian and the Australian bushfires—combined.

Looking for something you can do to help your clients be better prepared for 2021? We suggest reaching out to schedule time to review and prioritize their financial goals.

You can use the list of 17 financial objectives from the Goals-Based Financial Planning article or create your own list. Some advisors use “priority cards,” each with a different goal, and encourage couples to prioritize them separately and then together. However you do it, guide them toward giving serious thought to revisiting their goals regularly.

While we can’t turn back the clock, financial advisors and planners can use what they’ve learned this year to be much better prepared for 2021. I think we can all agree that this year, hindsight really is 2020.

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