Financial planners can take a couple of different approaches to determining success with clients.
The first is to work out an individual plan and track progress against that. This is the most popular approach by far, even though it is frequently derailed by events and clients are not usually very good at following such plans. Some aren’t even very good at making them, because they overestimate their ability to adjust their financial behaviour. So it can take years for the plan and review process to really begin to work its magic, and those years require commitment on the parts of the client and financial adviser.
Another approach is to identify a series of general indicators of financial fitness and check how the client is tracking against those. They are less personal but in some ways more valid – they relate to objective measures of what benefits a client. They are also suggestive “most people are aiming for these” and “people tend to enjoy a comfortable retirement if they have achieved the following”.
The list recently published by Richard Meadows at stuff.co.nz on the 14th is a good guide:
1. Have some form of savings or investments
2. Have some sort of insurance
3. Actively saving towards retirement
4. Have a savings goal
5. More than $5000 saved
6. Own the home you live in
7. Feel financially secure
8. Totally debt-free
9. In a comfortable position to retire
10. More than $100,000 saved
You really should read the whole article, however. There are some interesting stats on the proportion of people who have achieved each of these milestones. Much to agree, and disagree, with.