Journal of Financial Planning: March 2026
Brendan Pheasant, CFP®, ChFC, is a financial planner with Tuyyo Planning Group, LLC (https://tuyyoplanning.com), and a doctoral student in personal financial planning at TTU, where he focuses on how we do or do not support human needs, well-being, and development in the financial planning process. Brendan’s vision is intelligent, academically based, well-being-centered financial planning.
Meghaan Lurtz, Ph.D., is a professor of practice at Kansas State University and lecturer at Columbia University in the field of financial psychology.
Goals are the lifeblood of the financial planning process. “Goal-based” financial planning gained popularity in the early 2000s as an alternative to modern portfolio theory (Blanchett 2015; Shefrin and Statman 2000). It shifted the focus from the portfolio as the primary outcome of financial planning to the life goals the portfolio was supposed to support. Today, the CFP Board of Standards even defines financial planning, in part, as “a collaborative process that helps maximize a client’s potential for meeting life goals . . .” (CFP Board of Standards 2019).
However, embedded in the goal-based financial planning paradigm are assumptions about a client’s ability to generate relatively comprehensive lists of goals, and that accomplishing these goals will actually improve the client’s life. This article discusses the realities of these assumptions, their potential consequences, and solutions that financial planners can begin implementing in their practices today.
The Problems with Goals
In the CFP Board of Standard’s Financial Planning Process, identifying and selecting goals is the second of seven steps (CFP Board of Standards 2019). The identification of goals initiates a path-dependent process that shapes the remaining steps. If errors or omissions occur at the goals step, relevant information will be missing, hindering the optimal execution of subsequent steps. For example, in step three, when the adviser analyzes current and alternative courses of action, failure to identify all relevant goals means the planner cannot accurately assess the full impact of each course of action on the unstated goals, or the impact of the unstated goals on the achievement of the stated goals. In step four, when the adviser develops recommendations, omitting relevant goals can lead to recommendations that over-allocate resources to the stated goals. Even in step seven, when planners are monitoring the client’s progress toward their goals, assessments may not be accurate if there is incomplete awareness of the client’s goals. The following sections discuss specific challenges that clients may face in setting goals and the consequences for the financial planning process.
Clients Are Not Always Aware of Their Goals
Goal-centric financial planning processes assume that clients are relatively aware of their goals, but this assumption may not always hold. In one study, participants were asked to identify their top investment goals. However, when they were later presented with a master list of investment goals, almost three out of four participants changed at least one of their top three goals (Murphy et al. 2019), challenging the assumption that people are aware of their goals.
Research also indicates that additional time and consideration are unlikely to resolve the problem of incomplete goal awareness fully. In another study, prospective M.B.A. students were given a week to compile a list of objectives important to them when selecting an M.B.A. program. In addition to more time, a week, they were allowed to use outside resources and still ended up, on average, replacing half of their final objectives from a master list (Bond et al. 2008).
A financial planner with a solid goal-setting process may help clients identify unstated goals within common categories such as retirement, college planning, or charitable giving. However, other goals may be much more challenging to uncover. Some goals may be vague or in the early stages of development, such as the desire to start a business or nonprofit in the distant future. The client may not understand that there are concrete actions they can take today to position themselves for this possibility (e.g., favoring taxable accounts for wealth accumulation) and may not bring up the goal. Other goals may require that the client’s attention be drawn to information in advance of when they might otherwise have discovered it. Being financially prepared to assume guardianship of a sibling’s child if that sibling dies prematurely requires awareness of one’s status as the named guardian in the sibling’s will and of the sibling’s financial situation. Planning for a private middle school may require the client to review information about schools zoned for their area. In such situations, it is possible to help clients become aware of these goals by facilitating their access to relevant information in advance, before they might otherwise have become aware of it. Master lists can be great tools to facilitate the preemptive discussion and identification of goals. Still, complete identification of all potentially knowable goals is, perhaps, impossible, even with the robust lists of life events used by some life-centered financial planners. Failure to identify all goals may lead the financial planner to over-allocate resources to the stated goals or fail to consider alternative courses of action.
Clients May Generate New Goals or Change Existing Goals
Even if the initial goal identification and selection process was perfect, things change. Clients’ original goals may evolve, or new goals may develop that were impossible to predict originally. The generation of new, highly important, highly resource-intensive goals presents significant challenges in a goal-centered financial planning paradigm, as there is a tendency to allocate available resources to maximize the likelihood of achieving stated goals. This can be especially problematic when the beautifully crafted plan to achieve a client’s originally stated goals makes attaining the new goal(s) risky or even impossible.
A quintessential example occurred during the COVID-19 pandemic, when many clients found themselves needing home-office space that had not been factored into their original home purchase. This is not the fault of the goal-setting process, but a fact of life; things change, and sometimes clients need something unexpected. In the home-office case, the costs were significant, and clients faced real challenges meeting their work obligations. Consequently, the process of maximizing the achievement of prior stated goals may have impacted the ability of clients to purchase a new, larger home. Other examples of this include midlife crises, in which clients may want to change jobs to a more fulfilling (often lower-paying) career, start a business that requires an up-front investment, or return to school, which may require additional resources in the form of time and money. The process of maximizing the achievement of the originally presented goals can impact the client’s ability to achieve these unexpected goals down the road.
Clients May Struggle with Time Horizons
Research from Hal Hershfield demonstrates how difficult it is for humans, which would include financial planning clients, to think about the relationship between their current and future selves, a concept called future–self continuity (Hershfield et al. 2011). Most importantly, people who have less future–self continuity have a less vivid idea of their future self and find it more difficult to do things like save. In the brain, when future–self continuity is low, it can feel like a person is saving now (and foregoing fun spending) only to give the money to a stranger in the future, which is not motivating. Conversely, when people have higher future–self continuity, they are more likely to do things today to benefit the future self (save, exercise, eat healthy) (Hershfield et al. 2011).
In financial planning, practitioners may be familiar with clients who come into the office focused on short-term goals, without considering longer-term goals such as retirement, college, or long-term care planning. Clients with a short-term focus may have multiple goals, but they may be over a limited time horizon, perhaps just a year out. In some cases, these clients may insist that they are not concerned about these longer-term goals. Such clients put financial planners in a precarious position, where allocating resources to these short-term goals may compromise the client’s ability to achieve longer-term goals.
Conversely, other clients may focus exclusively on long-term goals and fail to enjoy their lives today. It is great to have money in and through retirement, but if the client never goes to Europe, buys “the car,” or takes a vacation before fully retiring, they might not be physically or emotionally able to enjoy these things they worked so hard to save for later on. A recent report from the Financial Planning Association (2025) on retirement planning found that advisers were significantly more likely to think their clients were prepared for retirement than the clients were to think they were prepared for retirement. Such a discrepancy may mean that clients are missing opportunities to develop and discuss realistic goals with their financial planners that could improve their quality of life and well-being today.
Some Goals May Not Accomplish What the Client Wants
Some financial planning goals are not actually goals per se, but rather means goals, which are steps along a path to yet other goals.1 Failure to identify means goals can lead a financial planner to make recommendations that support a means goal when it is no longer relevant to the achievement of the goal it was originally intended to support. An example would be a client who wants to add to their real estate portfolio to help fund their retirement. If the client later receives a large private equity payout at work, failure to distinguish between real estate as a means to an end rather than a primary goal could lead the client to use some of the payout to acquire the property. However, if funding retirement is the primary goal and the payout is large enough, they might not need the next real estate purchase. In fact, in the new circumstances, the client might be able to retire earlier than expected, changing the timing of their cash flow needs (e.g., having a few more high-withdrawal years before they claim Social Security). In this case, more liquid investments might better support the client’s new reality, and purchasing the real estate may be counterproductive.
Not All Goals Make the Client’s Life Better
An underlying assumption of goal-centered financial planning might be that if a client values a goal, they will derive utility from achieving it. A substantial body of research has refuted this assumption (Bradshaw 2023).
Valuing and pursuing intrinsic goals—such as self-improvement, connection with important others, or contributing to the community—are associated with a host of well-being indicators, such as life satisfaction, meaning, vitality, and positive emotions (Bradshaw et al. 2023). Extrinsic goals, such as financial success, attractiveness, and fame, are not associated with these indicators of well-being. However, when people prioritize extrinsic goals over intrinsic ones, they tend to have fewer well-being indicators and actually show higher levels of ill-being (Bradshaw et al. 2023). The reason is that intrinsic goals are believed to provide opportunities for fulfilling innate psychological needs, while extrinsic goals do not directly support the fulfillment of psychological needs (Bradshaw 2023).
In the same way that humans have physical needs such as air, nutrients, and shelter, we also have psychological needs that, when fulfilled, enable optimal functioning and well-being, and, when absent, result in suboptimal functioning and ill-being. Regardless of a financial planner’s skill in helping clients achieve their goals, the outcomes for clients’ well-being will differ depending on the types of goals the client pursues.
Arrival Fallacy
Realizing that achieving one’s goals doesn’t always make us happier is easier said than done. Psychologist Tal Ben-Shahar coined the term “arrival fallacy” (Ben-Shahar 2008), referring to the fleeting feeling of happiness that follows meeting a goal. Arrival fallacy is tied to the “hedonic treadmill.” Humans are programmed to always want just a little more and then stay on the treadmill instead of getting off when or where they thought they would be satisfied. Clients may work very hard to buy a house, fund their retirement, and send their children to school debt-free, yet these goals may also leave them wanting a bigger house, a larger retirement, and the ability to give even more to their kids.
Working Better with Goals
Given the challenges with goals, should financial planners abandon goals? No, goal-based financial planning is a great idea. It signals to the client that the financial planner is ready to discuss their work more holistically, moving the discussion beyond portfolio allocation and performance to what clients really want to achieve. Yet, in practice, getting clients to accurately and comprehensively formulate goals that achieve happiness and well-being across their lifespan is very difficult. By recognizing these inherent challenges and seeking to mitigate them where possible, goal-based financial planners can help improve their clients’ outcomes. This next section will focus on ways financial planners can address the problems associated with these challenges.
Utilize Lists
Use a list to support goal generation. Advisers would do well to keep in mind that many prospective clients and ongoing clients have never had a professional financial planning relationship. What is more, few people grow up in homes where finances are discussed openly, calmly, thoughtfully, and fully. When a client enters a financial planning office for the first time, or even if they have been coming for years and are officially entering retirement, advisers can support clients in goal generation and development by providing a list for clients to draw on. One note of caution with master lists is that research has identified differing well-being outcomes from self-generated versus master list goals (Klug and Maier 2015). Pheasant and Lynn (2025) recommend identifying the types of motivation associated with client goals, as the level of engagement with the goal and well-being outcomes differ depending on whether the client fully endorses the goal or feels pressured to pursue it.
Utilize Pre-Mortems
The Alliance for Decision Education, a group of researchers, teachers, and practitioners, advocates for pre-mortems. Pre-mortems, originally developed by Gary Klein, encourage decision makers to imagine a failed idea or a failed financial plan and work backward to ensure blind spots that sometimes result in worst-case scenarios have been accounted for in the plan. Financial planners, from this perspective, may ask questions like, “If you reach retirement and find that you are deeply unhappy, what has happened; what is happening that is causing or would cause emotional distress or boredom?” Then, with an idea of what may be causing or resulting in boredom—such as feeling aimless—advisers and their clients can work backward to build fail-safes into the plan, such as developing hobbies preretirement.
Connect Current and Future Self
Another simple practice is to ask not just about the future, but also how the person engages with those future ideas today. As an example, instead of just asking “what do you think you would like to do in retirement?” or “when you picture your life in retirement, what are you doing?” and stopping there, planners can also ask a follow-up question such as, “Do you engage in any of those activities today?” The goal is two-fold. First, questions like this create the opportunity for greater future–self continuity. If a person can see themselves today and feel a connection to their future self, they may be more likely to take steps to benefit that future self, such as saving or making other current changes. What is more, this also helps to combat future-affect forecasting errors, where clients fail to accurately predict future emotional states. If a client puts off travel until they retire, they risk discovering it may not bring them the happiness they expected. Conversely, engaging in a conversation that helps clients consider travel throughout one’s life may be a simple first step toward learning more about travel—or any other goal—and its actual impact on their well-being.
Run Safe-To-Fail Experiments
Relatedly, advisers can also engage in “safe-to-fail” experiments with new or future goals. A safe-to-fail experiment is simply getting a client to try something and then reflect on the outcome in a way that running the experiment itself won’t negatively impact the long-term goal or desired long-term outcome. The point in doing this is to move from hypotheticals, “I think I would love to visit France for three months each year in retirement,” to actual data, “I’ve traveled around France and know that I love Nice, not Paris, and two months is all I need, not three.”
To gather more concrete data like this, clients can plan to spend two weeks in France each year before retirement to gather information about their preferences. Upon the client’s return, advisers can invite the clients into the office to “debrief,” asking questions about what was enjoyable, what they learned, and what they would like to try differently next time. Conducting “safe-to-fail” experiments is really about living out portions of one’s future life today. Clients can help ensure the goal is “worth it,” gather the necessary details for the plan, and deepen their connection to their future self.
Bringing Up the Conversation
Research has found that mindfulness can reduce the discrepancy between what one has and what one wants (Brown et al. 2009) and tends to come with more emphasis on intrinsic goals and less emphasis on extrinsic goals (Bradshaw et al. 2021). For financial planners, this means that even if it does not seem like clients are taking much action based on the above recommendations, they may be contributing in valuable ways beneath the surface. The simple act of reflecting on one’s past, present, and future goals and their effects on one’s well-being may facilitate greater financial satisfaction and more discerning goal-setting over time.
Financial planners can also facilitate clients’ understanding of why their goals are important by helping them uncover the underlying needs. In a prior issue, Pheasant (2024) discusses a process in detail for getting at a client’s underlying needs, which may help clients guide themselves toward more intrinsic (need-supportive) goals, identify means goals, and generate less resource-intensive versions of goals.
Conclusion
Goal-setting is hard. Clients may often have an incomplete list of goals, choose goals that do not maximize well-being, select goals that may over-allocate resources to the “wrong” goal, and limit a client’s ability to adapt to future goal developments. To complicate matters, goals differ qualitatively: some may help satisfy psychological needs, for instance, and positively impact well-being, while others might be purely hedonic. Some goals may not even be what the client wants to achieve but instead may be means to achieve other goals.
Goals-based planning is an important financial planning evolution, but with every evolution, new challenges arise, requiring new skills to be developed and practiced. To get more out of goal-based financial planning, financial practitioners will want to add practices like pre-mortems and lists. Financial planning practitioners will also want to update the way they ask questions and engage clients in thinking about their future using, for example, safe-to-fail experiments, and encourage discussions about goals that create greater future–self continuity.
Clients of financial planners who engage in goal-centered financial planning are already in for a rare treat: the opportunity to discuss and be guided toward achieving what really matters in their lives with a competent professional. Clients of financial planners who also acknowledge the limits of goal-centered financial planning and practice these techniques may be setting their clients up for even greater future adaptability and well-being, which is perhaps more important than ever in our world of rapidly accelerating change.
Endnote
- Similar to and inspired by the ideas of Keeney (1992) who differentiated fundamental versus means objectives.
References
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