Only 30% of Australians know what their goals in life are, revealing a significant opportunity for financial advisers using a goals-based approach.
According to new research from Advice Intelligence, about 70% of Australians don't know what their goals in life are.
Taking the time to work with your client, understand their lifestyle and articulate their goals can contribute substantially to financial outcomes.
"Goals are emotionally motivated; they are tangible and meaningful to clients. More so than outperforming markets by a percentage," Advice Intelligence chief executive Jacqui Henderson said.
The research shows more than 75% of people fail to achieve their goals, so understanding the basic principles of behavioural science can assist advisers in establishing realistically achievable goals with their clients.
To do so, advisers must ensure the goals are specific and measurable, that they are prioritised correctly with a determined timeframe and acknowledge all the possible associated risks.
Henderson said financial planning is, by definition, a goals-based conversation, yet there is more room for improvement in the old world of advice.
"How many advisers can put a number on how many goals they helped their clients to achieve? In the old world, I'd say not many," she said.
"In the new world, advisers can say exactly. With goals front and centre, clients are constantly reminded of the 'why' that's driving them, giving them a greater sense of control over their future."
Technology is crucial to both the goals-based approach and the ongoing sustainability of the advice industry, Henderson said.
Looking to the future, she said: "Data, machines and algorithms will be utilised to perform much of the calculation, research and compliance functions of financial advice. The outcome will be ensured efficiencies for advisers. On the spot, personalised advice will be accessible to more Australian consumers."
"By testing different scenarios interactively with clients, they can visualise how financial advice helps them to better their position. They become part of the advice experience. The conversation is focused towards what matters most to them - their goals and life aspirations."