Certainly one of the most common approaches currently in vogue in financial planning is goals based planning. This approach intends to go beyond simply investing to make (and hopefully not lose) money to incorporating a person’s goals into the investment selection and process. This has always sounded good to me, though in practice it does not always work the way you think it should or as well as it might.
However, lately it seems increasingly clear that not everyone is suited to goals based planning. This should come as no surprise as many investors have always seemed to focus on performance and returns and avoid the complexities in goals based planning. Another group of investors we have seen of late are those who profess not to have any goals. These tend to be older persons with substantial assets and/or income who do not have an immediate family. Absent what may be termed natural objects of affection (such as children and grandchildren) these investors are not really looking toward the future in any specific way. When coupled with a lack of charitable interests, focusing on goals is difficult if not irrelevant. Wait a minute, you say, what about long term care and medical costs as one ages or what about moving to a better climate or other goals older persons typically pursue? Well, with all of the income and assets available to these investors, they have no worries on that score and although we can show them a financial plan confirming their beliefs, that really is not adding value for them.
At this point in time there doesn’t seem to be any shining, ideal solution for these clients. Sure, we can nudge them into making a will and providing that whatever remains at end of plan goes somewhere, even if it is simply to the taxing authorities. Believe it or not, some of these types of clients haven’t really done any significant thinking or planning on this score, leaving qualified plan assets and insurance proceeds to their estates instead of individuals or maybe a trust. A few clients have made their “goal” be a specified value of an estate at death (what they did NOT spend on themselves or others). That is not really a solution since it leaves unanswered where the money might best be used or why they worked so hard to make it through employment and investments if there was not a purpose other than some number. It sure makes one think.