Rob Roels, CFP®, Vice President, Associate Director of Wealth Planning – Development Lead
Many of us struggle with the execution of long-range goals. Although we may understand that they are important, often they are not very urgent…so they are moved to the back of the list and suffer from lack of good, early execution. It’s like when you go to your doctor for your annual checkup and she tells you to eat more leafy green vegetables, eat less processed foods, exercise more, and so on. That message is unexciting, but we know it to be true. It is the same way with planning for your financial future.
Many financial professionals talk about doing financial planning and, as part of that process, they want to help you reach your financial goals. A good advisor will help stimulate that conversation with you so that you can picture what your ideal future should look like. Questions like, “When do you see yourself retiring?” or, “Would you like to live somewhere warmer in your golden years?” or, “How much, if any, of your children’s education funding do you want to provide?” These are all important waypoints to get some sort of structure around this imagined future.
The problem is that most of us are not good at imagining our own futures or what our retirement will look like years down the road. In a 2013 study,1 researchers measured the personalities, values, and preferences of more than 19,000 participants. The study asked participants to report how much they had changed in the past decade and/or how much they thought they would change in the future. Results showed that people underestimate how much they will change in the future while acknowledging that they have, in fact, changed very much in the past. A key takeaway is that no matter how much information we have as humans, we are not great predictors of the future beyond today, so dubbed by the researchers as the “end of history illusion.” This has big impacts when we try to anticipate our future goals.
However, we do understand that future goals can just be guesses about what the future holds for all of us. The great part of working with a trusted advisor on your financial plan is that “the plan” is not a thing — it’s an iterative process where your advisor touches base with you regularly to make sure you’re on track. Remember, the most important step is the first. Be proactive and start the process. It can be very empowering to know you have set a course for your future. And while your journey may change over time, at least you have some comfort in knowing you have a plan.
Contact a D.A. Davidson financial professional for more information or to get started on your financial plan.
1 Quoidbach, Jordi & Gilbert, Daniel & Wilson, Timothy. (2013). The End of History Illusion. Science (New York, N.Y.). 339. 96-8. 10.1126/science.1229294.
D.A. Davidson & Co. is a registered broker-dealer and registered investment adviser that does not provide tax or legal advice. The information contained herein is believed to be reliable, however; we can make no guarantee as to its accuracy or completeness. Any opinions expressed are based on our interpretation of the data available to us at the time of the original article. These opinions are subject to change at any time without notice. Copyright D.A. Davidson & Co., 2021. All rights reserved. Member SIPC.