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New research continues to stress the importance of defining your best life for retirement success

Image of Retirement mindset matters research report

A new survey from Goldman Sachs Asset Management and Syntoniq, a behavioral finance research organization, has identified four “optimal” characteristics that help retirement savers turn their intentions into actions.

These are:

  • Optimism: the higher your optimism the more often you will take proactive action, such as setting up personalized financial plans.

  • Future orientation: the more you define your future the more often you will engage in proactive financial behaviors, such as prioritizing retirement planning.

  • Risk vs reward orientation: the more likely you are to focus on achievements and rewards, the more often you will act proactively, report less stress when managing finances, and have a higher level of savings.

  • Financial literacy: This goes without saying but the more you understand finances, the more likely you are to take the right actions.

While developing all four traits is important, the research points to two traits - optimism and future orientation - as the priority.

Here’s why (in our view): the more you can define your future and what your best life looks like, the more likely you will take action. The more optimistic you are in achieving your best life, the happier you’ll be to take those actions and engage in rewarding behaviors rather than looking to reduce your risk. In fact, we’d even go as far as to prioritize these four characteristics in the below order:

Priority order of 4 financial characteristics for retirement success: 1) Future orientated; 2) Optimism; 3) Rewards Focused; 4)Financial literacy
  1. Future orientation: because you need to know what you want to achieve in life.

  2. Optimism: because optimism means you can realistically achieve that life and will stretch yourself to achieve it.

  3. Reward orientation: because celebrating the wins and achievements motivates further action and optimism.

  4. Financial literacy: this is last because it is what they are hiring you for, to help co-create and guide them to their best life with your expertise and knowledge.

To date, the financial advice profession has been very good at helping clients understand their risk profile. And, we’ve placed a strong emphasis on educating our clients about financial strategies and instruments. But we’ve not spent enough time defining and personalizing what they want their lives to look like beyond a few basic retirement goals.

If advisors want their clients to be more engaged then we have to better address what their "best life" looks like for each individual client.

Now, you might be thinking that this all sounds lovely but how on earth do I get clients to open up about what they want to achieve in life beyond basic financial retirement goals? After all - you are financial planners and not necessarily life coaches. And, the hardest part in defining a client's best life is actually getting them to step back and articulate what it means for them and their household.

Here’s our 4-step process that we believe will help you to personalize your financial plans to improve engagement and deliver more actional advice.

better conversations with Lumiant

1. It starts with having better, deeper conversations about life

Defining a client's best life is no easy task. Actually having them articulate what’s important to them and getting them to picture what their ideal future looks like can be nearly impossible. Particularly if your discovery process places significant emphasis on questionnaires and assessments for their financial goals, risk appetite, and current financial progress.

We need to step back before we get into the nitty gritty of financial planning and actually ask what it’s all for.

Now we’re not saying to get your clients to lie down on a couch and ask them about the meaning of life. But we do need to get slightly psychological here. Think of it a bit like a “financial therapy” session.

We use values to help clients articulate and define what their best life looks like. We believe values guide our actions and decisions. They shape our priorities and help us determine what is meaningful and fulfilling to us.

However, others use quizzes with provoking questions. Some use philosophical concepts like ikigai. While others might use vision boards and other visualization techniques.

Whatever you choose to use, the important part is invoking a conversation with your clients about what they actually want to achieve in life, in terms that they can relate to and imagine. Then bring that vision to life with imagery to give clients real clarity on what their life could look like.

SMART Goals captured in the Lumiant platform via a visual interface

2. Be realistic to be optimistic

OK - you’ve helped them to imagine their best life and what goals they might need to get there. Now it’s time to make them feel optimistic about being able to live that future.

Nothing does this better than a little dash of realism. While it might be exciting to dream big, if overly unrealistic you’ll never be optimistic in achieving your dreams.

That’s why we capture and transform a client's best life into SMART goals. We can then map these goals against their financial timeline to uncover how likely they are to achieve their best life, pointing to the different levers and strategies you can use to improve their chances of achieving everything they want.

In our view, it’s always good to push your clients and include some “stretch” goals - or what we term “dreams come true” in your projections. This ensures that you retain the excitement while grounding it in realistic outcomes for clients which they’ve defined as living their best lives.

Woman celebrating the wins in life

3. Celebrate the wins in life

To help coach clients from a risk orientation (the vigilant pursuit of goals focusing on security and protection) toward reward orientation (the eager pursuit of goals focusing on achievement), you need to start celebrating all their achievements in life.

This means keeping track of all their goals - whether financial or non-financial - and creating space in meetings to review and celebrate what’s been accomplished. This will be a lot more powerful in creating action than celebrating the financial performance of their portfolios. In fact, we recommend spending less time on what the markets are doing and more time discussing how they are doing in life.

To do, doing and done goals as captured in the Lumiant financial planning platform

For really risk-averse investors, start small. Identify the little wins and moments where they’ve achieved something that has taken them outside of their comfort zone. Whether it be a financial activity - such as not looking at the markets for a month - or a personal achievement, such as going to a gym class once a week.

Whatever it might be, find those small things that you can celebrate and share in the wins with your clients. You'll be surprised how quickly small successes can turn into big achievements.

Superhero financial advisors

4. Continue to coach and guide your clients on financial literacy

Clients have come to you because they need an expert with knowledge on how to make the most of their financial situation and maximize their opportunities in retirement. This means continuing to educate your clients on key aspects of financial planning so they can make informed choices on the type of life they are willing to lead to achieve their goals.

However, not everyone is an expert in financial graphs, modeling, and Excel sheets. That’s why it’s important that you bring these conversations to life by putting them in terms that clients understand.

Trade-off levers: spending; saving; timing; risk; legacy

That means connecting your key advice areas to the client’s personal goals, values and areas of wellbeing. It means translating portfolio performance into the life outcomes they will support. And, it requires you to have conversations around risk trade-offs and longevity that help determine the timeline for success.

Visual aids are vital to help you coach your clients and continue to guide them in their choices - particularly outside of meetings.

What’s also helpful is aligning the financial behaviors you need clients to have with their values. We know clients often struggle with maintaining their optimism and motivation as soon as they leave your office. So, the more we can help them understand the consequences of their behaviors on their lives, the more likely they will make better decisions and execute their plan.

The Lumiant Academy for financial advisors

Want to learn more?

A Lumiant enhanced advice experience is designed to bring out these four optimal characteristics in clients. Want to learn how? Check out our latest course The Lumiant Advice Experience in the Lumiant Academy. The course embeds these four core elements, as well as supports you in defining your ideal Lumiant experience during the discovery, strategy, implementation and progress phases in your process.

Not only that, but the course provides continued education or continued professional development hours (3 hrs in the United States and 7 hrs in Australia). The course is free and offers a number of templates to help you design an extraordinary experience for your clients.


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