Goals based advice

Goals Based Advice is providing recommendations to the client regarding the strategies, decisions, courses of conduct and effort; as well as tracking and making periodic adjustments in order to stay on course so that the client will have an increased chance of attaining their particular predetermined SMART goals.

Let’s face it Goals Based Advice isn’t new. But, what is new are tools that enable financial advisers to help their clients set SMART Goals; develop plans, strategies and models; track and review progress; and make appropriate adjustments to attain those goals.

Goals based advice makes sense as clients typically have multiple goals, risks, timeframes and probabilities of success.

Goals based financial planning is an interactive process that progresses clients through these phases:

  1. DiscoveryIdentify and evaluate your most important financial objectives as well as potential impediments.
  2. Determine the RouteEvaluate what is required to close any planning gaps and decide if the desired course is viable.
  3. Embark on the Journey:Implement the appropriate strategies identified above.
  4. Stay on CourseManage the results for the duration of the journey.

Goals Setting Process

Goals Questionnaire

When providing advice, ASIC requires that the client’s voice comes through loud and clear. However, setting goals is often a tough ask for clients.

On one end of the spectrum, if you provide no guidance regarding goals to clients you are likely to not get any goals from them. This list of prompts needs to take into account their age and whether they are working or retired.

But, on the other end of the spectrum, you don’t want to provide a list of “pre-packaged” goals either. ASIC takes a dim view when all your clients have the same goals. The trick is to find a comfortable medium. That is, provide a list of short prompts to help the client set goals. Enable them to set the urgency (high, medium, low) and timeframe (short, medium and long term) and then let them say, in their own words, what those goals mean to them (the client’s voice).

Clients need help from their financial adviser to help them turn their goals into SMART Goals during a valuable conversation.

SSpecific
MMeasurable
AAchievable
RRealistic
TTime bound

Goals Setting Tools

When the adviser meets with the client, either face to face or remotely, the adviser can help the client identify (if they haven’t already) or, finalise their specific goals, evaluate whether they are achievable (eg. sufficient cashflow), measurable, realistic (personal circumstances, affordability, risk and return) in today’s climate and market conditions and time bound, and agree the priority order,

The adviser uses the Goals Tool to strengthen the client’s goals so that they are: Specific, Measurable, Achievable, Reasonable & Time Bound (SMART). The goal is then prioritised and rated against other goals to determine it’s priority or urgency and the progress of the goal is determined and tracked over time.

Adviser file notes can also be added and a report generated showing that the adviser has explored the subject matter of the client goals and their broader circumstances as required by ASIC.

At review meetings the progress of each goal can be tracked to completion and then archived once the goal is achieved or if the client decides to discontinue the goal.


There does not seem to be an official definition for Goals Based Advice.

Goals-based wealth management was defined by Das et. al. (2018) as a process that focuses on helping investors realize their goals, both short-term and long-term, through a portfolio management method primarily focused on reaching well-defined financial goals. “Risk” is defined as “not meeting their goals”.

Although goals-based wealth management was pioneered in the early to mid 2000s the concept did not gain much traction until 2010 where it was typically focused on investment goals within an asset allocation framework.