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goals based advice

Blog | How to see opportunity over fear and worry less!

Travis Schindler
Partner/Private Client Adviser
20 Nov 2019

To some, good financial advice includes investment returns which track, or beat, a certain benchmark. To others, great financial advice means the achievement of objectives which provide a fulfilling and happy life, both for themselves and future generations.  

Obviously, investment returns are a big factor in whether your financial goals and objectives can be achieved but there’s more to it, which can mean less worry when it comes to your finances.  

Beware of conversations which begin with ‘investments’  

Chasing high investment returns is dangerous because it can mean more time worrying over markets and less time remembering your ‘why’ or ‘purpose’. A dip in the stock market can lead to sleepless nights, unnecessary stress and missed opportunities. It can also lead to taking on more risk than is required to achieve your goals.  

Why do we focus on conversations which begin with your goals and objectives?  

In our view, it’s about taking on the least amount of risk necessary to achieve your objectives. Our conversations with clients, therefore, need to begin somewhere other than whether to allocate funds to shares or property for example. 

Behavioural science shows that it’s not so easy for people to identify their own goals when simply asked. As advisers, we often need to dig a little deeper with open-ended questions.  

Simply having one goal such as ‘retire at 60 years of age’ is often not enough. 

Morningstar research has found that for clients, creating their own ‘master list’ of financial goals can assist with discovering what truly means the most. The study found that 26% of participants changed their top goal after developing their master list and about 73% of participants substituted at least one of their top three goals with goals from their master list.  

What are the benefits? 

For starters, focusing on goals provides a basis for how to invest your money across the various asset classes, called an ‘asset allocation strategy’. This should allow you to keep a level head during periods of volatility and protect against making regretful decisions. For example, if an investment falls in value by 15% soon after buying it, maintaining a focus on performance or benchmarks may influence you to sell and find the ‘next best’ place to put your money. Staying focused on your goals which commonly might be five, ten or twenty years away can help you stay rational in your thinking and see opportunity over fear (assuming nothing has fundamentally changed causing your original investment to become unsuitable).  

When to begin? 

Financial advice should begin as early as possible. Before retirement even appears on the radar, there are generally many financial objectives clients seek to achieve such as buying or upgrading homes, educating children and debt repayment. In today’s world, financial advice is far more than just access to data or investment options, it’s about holistic advice which enables you to achieve personal goals.  

To quote a Chinese Proverb, “the best time to plant a tree was 20 years ago. The second best time is now.” 

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.