Financial Planning Should Be About the Journey and the Destination


In Carol S. Dweck’s groundbreaking book Mindset, there is a quote relating to people mired in what she calls the fixed mindset.

“In the fixed mindset, everything is about the outcome. If you fail—or if you’re not the best—it’s all been wasted. The growth mindset allows people to value what they’re doing regardless of the outcome.”

There’s a connection here to the work of financial planning. Far too often in financial services, we are so focused on outcomes when giving advice and making recommendations, that we don’t spend enough time and energy trying to understand the more immediate, human side of the equation. It’s no wonder, since many of the fundamental questions of financial planning and wealth management revolve around the destination, rather than the journey (i.e. how much will I need to retire, how much do I need to save to pay for college, what withdrawal rate will allow my savings to sustain me to age X?). It’s as if the bulk of a person’s working life, when seen through the lens of financial planning, is merely a preamble to the more significant financial milestones we’re all looking to years from now. But at what cost?

Much has been said and written about Americans’ propensity towards working long hours, taking minimal vacation time, and living a life generally out-of-balance. In contrast, many European workers are known to enjoy shorter work days, including long lunch breaks, and month-long vacations. There is a tendency among the American working public, to view that model as akin to laziness, at least during one’s working years, though the dream of retiring to a life of leisure in the south of France is ubiquitous. The question of why we subjugate and even ignore our quality of life, during the prime of our lives, in favor of the potential for a high quality of life, at a later time when we might not be able to enjoy it, especially due to the way we live our lives in preparation for it, – seems an oddly contradictory, if not vicious, cycle.

You could argue that the current, widely-accepted methods of financial planning are merely the result of understanding the concerns and mindsets of the clients we serve. But that seems too reactionary to me. For all the talk about dreams and goals, particularly in the advertising by financial advice providers, the basic process still almost always comes down to: how much do you have, how much do you make, and how much do you need? Yes, those questions are important, and hopefully are answered in the context of a client’s specific circumstances and goals, but rarely, if ever, do you hear about an advisor asking the question “Are you happy?” Perhaps that’s because it is a much more difficult question to answer, or perhaps it steers financial advisors away from the analytical, numbers-based ground they are most comfortable on.

Then there is the contradiction of the long-term versus short-term outlook. It is generally accepted in investing, that, all other things being equal, the longer the time horizon, the more likely a positive outcome. As a result, advisors spend quite a bit of time encouraging clients to focus on the long-term. The underlying message is, earn and sock away as much as you can now, trying not to look, for as long as you can, at the present, and down the line, you’ll be rewarded. This logic is basically sound, and has worked for clients for decades, but it is also inherently devoid of balance.

Over the years I have come to know many clients who cannot enjoy the now without feeling first that their future is totally secure, as well as those who cannot fathom the idea of subjugating their happiness now for a future that is anything but a given. The ones who seem to be the happiest and most contented time and again, however, are those who understand the need to plan for the long-term, but manage to allow themselves to enjoy the present as well. They’ve found a way to reconcile the contradictory dual financial mandate, as it were.

How do they do it? Is it merely a growth mindset that allows a person to achieve this kind of harmony between the present and future? Or is it, as is often the case, a combination of factors working in concert, that creates the necessary disposition? Certainly, it would seem, people need to be open and introspective enough to let go of the things they cannot control, and change the things they can, but also to be willing to accept help and guidance from others as well. I have known advisors who begin each new client meeting with a much more psychological approach, by asking questions like “If money were no object, what would you do with your time each day?”, Or “What is your first memory dealing with money?” The effort to re-frame financial planning with this kind of approach certainly has value, and can potentially help clients think of their financial goals in new ways, even if it doesn’t always fine-tune their mindset as hoped.

The point is, as financial advisors, we are in a position to change the conversation, and really try to help clients strike that elusive balance between living in the moment and planning for the future. If, as a result, we are able to help them live more fulfilled lives now, I believe it will also help them be more open to our advice and recommendations about planning for the future, and greatly increase their chances of keeping that long-term focus we so persistently encourage. That, we hope, might just allow more of our clients to enjoy the journey as much as the destination.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual