Financial planning places considerable weight on client objectives, and rightly so. They provide the foundation upon which recommendations are developed, priorities agreed and financial resources allocated. Yet there is an assumption within this process that deserves more scrutiny: when a client tells us what they want, how confident should we be that we have actually discovered an objective?
There is an important distinction between a stated objective and a considered one. A client may tell us that they intend to retire at 60, travel more, help their children and retain sufficient capital to leave an inheritance. All of those ambitions may be entirely genuine. The danger for the planner is not that they are necessarily wrong, but that their apparent clarity encourages us to move too quickly from recording them to planning around them.
Experienced planners know that objectives rarely arrive independently of the life that produced them. By the time clients reach the later stages of their careers, they have spent decades adapting to circumstances. Careers have influenced where they live and how they use their time. Children, mortgages, relationships and caring responsibilities have altered priorities. Some ambitions have been achieved, others consciously rejected, while others have been postponed so repeatedly that they may no longer occur to the client as realistic possibilities.
That raises an interesting discovery problem. When clients describe what they want from later life, we may be hearing not simply aspiration but aspiration already filtered through experience, expectation and accumulated compromise.
This became important when developing Map 5, Later Life, within the FPPM. The initial temptation was to concentrate on the familiar components of retirement planning: when work will finish, what the client will do afterwards, how expenditure might change and what resources will be required. The more interesting question, however, is whether the client's present description of later life represents a sufficiently examined starting point.
One way of approaching this is to explore abandoned ambitions.
This should not become an exercise in encouraging clients to resurrect youthful dreams simply because they once held them. People change, and ambitions that mattered at 30 may quite reasonably be irrelevant at 60. Nor should planners assume that an unconventional objective is somehow more authentic than wanting a relatively ordinary retirement. That would replace one set of assumptions with another.
The professional value lies in understanding why an ambition disappeared.
A client may once have wanted to live overseas, study, build a business, travel extensively, devote serious time to an interest or structure life very differently. Perhaps that aspiration was consciously rejected. Alternatively, it may have been deferred because work, family or financial circumstances made it impractical at the time. If the constraint subsequently disappears but the assumption remains, the client's conception of what is possible may be narrower than their present circumstances require.
This is where discovery needs to do more than collect information. It needs to create sufficient space for propositions to be examined.
There is also a delicate professional boundary here. We should resist the attractive idea that somewhere beneath the client's stated objectives lies a more authentic version of what they “really” want, waiting for a sufficiently skilled planner to uncover it. That gives the adviser an authority we do not possess. Persistent questioning can influence an answer as easily as illuminate one, and planners are capable of introducing their own assumptions about what constitutes a fulfilling later life.
The objective, therefore, is not to replace the client's stated aspiration with the planner's interpretation of it. It is to understand the basis upon which that aspiration has been formed.
That means being interested in the difference between preference and assumption. Why 60? Why that level of expenditure? Why retain the house? Why leave that amount to the children? Why continue working, or why stop completely? The purpose is not to challenge every answer for the sake of appearing insightful, but to recognise when an apparently precise objective rests upon something that has never really been reconsidered.
This becomes particularly important before cash-flow modelling. Once an objective has been translated into the model it acquires a degree of apparent substance. A retirement age, annual expenditure figure or intended legacy becomes an assumption against which sustainability can be measured. The analytical work may then be extremely sophisticated while the underlying objective remains relatively unexplored.
The proposition behind Map 5 is that later-life planning should resist that sequence. The adviser should first develop a richer understanding of the life being contemplated, including work, purpose, activity, family, previously deferred ambitions and the possibility that different stages of later life will feel quite different. Financial assumptions can then be developed from that understanding rather than being allowed to define it prematurely.
Eventually, reality has to intervene. Clients have finite resources and cannot necessarily pursue every aspiration simultaneously. Choices between earlier retirement, greater spending, family support, security and eventual legacy are an unavoidable part of planning. The quality of those choices, however, depends upon the quality of the discovery that preceded them.
For advisers, that may require a subtle change in how we think about objectives. What clients initially tell us should be taken seriously, but perhaps not always taken as settled.
The test of good discovery may not be whether we have successfully recorded what the client wants. It may be whether planner and client have done enough work together to understand why they want it, what has shaped it, what has been left out, and whether the objective still holds once those assumptions have been properly examined.
That is a considerably more demanding standard of discovery, but it is also much closer to the work financial planners claim to do.