Why Accountability May Be the Missing Key to Reaching Financial Independence

Why Accountability is the Missing Key to Reaching Financial Independence



Financial independence is talked about frequently, but how many people actually achieve it?  Obviously, not that many since Time Magazine recently reported that over half of six-figure earners are living paycheck to paycheck.   Still, most people aspire to build their net worth to where work is optional, not required.  How do you achieve that?  A big part of the wealth-building process is sheer discipline.  However, there is one other critical element, and that’s accountability.  Turns out someone checking in on your progress can be equally or even more powerful.

Research on Accountability and Goal Achievement

Recent research suggests that accountability is crucial in achieving life goals.  A study by the American Society of Training and Development found that people are 65% more likely to reach a goal after communicating it to another person.

Here are other findings from the same study:

  • Setting a timeline for your goal can increase your odds of achieving it to 40%
  • Creating a plan of action can increase the odds to 50%

The clincher?  While sharing the goal with another person ups the odds of success to 65%, scheduling regular accountability check-ins with that same person increases it to a whopping 95%.

In other words, there is an estimated 95% success rate when you setup an accountability system for your goal.

How Financial Planning Creates an Ideal Accountability System

Done right, the comprehensive financial planning process by a CERTIFIED FINANCIAL PLANNER® professional can serve as a perfect accountability system.   First, you’ll clarify your goals.  Then your wealth manager will work with you to put them into a complete financial plan that contains milestones and strategies.

As critical, you’ll want to then make sure your financial advisor arranges quarterly checkups to keep you accountable to your goals.  This arrangement gives you that key person who can comfortably hold you accountable.  In fact, that is part of what you pay them for…making it all the more motivating for you to stick with your plan.

But Accountability Shouldn’t Stop There

Being accountable to your own goals is critical.  But there’s another aspect that people sometimes forget.  Your financial advisor should be accountable for their part, as well.

That means investing your money appropriately for your goals and helping you generate better risk-adjusted returns.   However, too many people ignore this fact and accept whatever returns the financial advisor generates.

But think about it…if you’re paying thousands of dollars a year for money management, shouldn’t the firm generate far better returns than you could on your own?

We believe so, and fortunately, there’s a way you can easily hold your advisor accountable.

How Can You Get Financial Advisor Accountability?

We’ve written at length about the retail wealth management industry’s lack of accountability to its clients.  This is starkly different than the institutional money management world, where transparency and reporting are expected and mandatory.

Still, we understand that asking your financial advisor if they will be accountable for reporting an investment track record can be awkward.  Fortunately, there is a solution.  You can look for a firm that voluntarily holds itself accountable.

Accountability through GIPS® Compliance 

One of the most effective ways to ensure accountability in wealth management is by working with firms that voluntarily adhere to the Global Investment Performance Standards (GIPS®).  These globally recognized standards help establish a level playing field and showcase a firm’s commitment to transparency and ethical practices.

By selecting a firm that complies with GIPS® standards, you can compare firms apples to apples.  That way, you can evaluate the investing skill of the wealth managers to make sure you are confident they can help you keep your investments on track.

The Power of an Accountable Team

Having a financial plan in place and an accountable financial advisor on your team can be a potent combination.  You’ll be working to meet your own financial goals, while your financial advisor will be hard at work growing and protecting your assets at the same time.

By clearly understanding your financial goals and working with professionals who hold themselves accountable, you are more likely to achieve your desired results.

Using Technology to Further Accountability 

Fortunately, technology can help you even more.  With today’s technological advancements, the financial landscape has evolved, making it easier than ever to incorporate accountability into your day-to-day financial life.  From budgeting apps to dashboards that synch automatically, technology offers many other tools to help you stay on track.

Key Takeaway

In conclusion, you need discipline to reach financial independence, but you also need accountability.  By putting a plan in place, then committing to this road map, you can focus on executing the steps you need to reach your goals.  At the same time, partnering with a wealth manager who is equally accountable can help you progress even faster.  By putting these aspects together, you have the keys to unlock your financial potential and turn your dream of financial independence into reality.


Looking to get on the road to financial independence?  

Find out how our GIPS® compliant investment management and full-service financial planning can help.

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