As a product expert, Drew has extensive experience working directly with both retail and enterprise partners. He enjoys taking feedback from users to continue Advicent's high standard of financial planning software. Drew graduated with his MBA in 2014 and is currently pursuing his CFP certification.
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Whether setting goals for your practice or helping clients set their own financial goals, the goal setting process should meaningful and not done haphazardly. A great system for setting goals is the SMART goal system. This system stems from business guru Peter Drucker’s management by objectives concept, but it has been written by many subsequent authors as well.
Setting SMART goals
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 the goal-setter to improve upon a targeted area of their life. In most cases, you or your clients are setting goals to “be better” at something. Without specificity, however, it is difficult to determine exactly what improvements will be made, and this lack of direction can make it difficult to determine the necessary steps for achieving the goals.
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 inherently negative, aspiring to goals that are completely out of reach only sets you up for failure, which often causes people to give up. 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, but there are other factors to consider regarding 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 much easier to achieve 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 completing.
Tying your goals back to overall business success
When all these pieces are considered, the business goals you set will be clearer, more meaningful, and trackable. This system forces action or an admission of inaction as the goals are periodically reviewed. Whether goals are successful or unsuccessful, the SMART system makes us all 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.
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