Making a resolution (and a plan) that is built to last

We’ve reached the time of year where research tells us most people have abandoned their New Year’s resolutions. According to U.S. News & World Report, 80% of New Year’s resolutions fail by February. Those promises of eating less or working out more become guilty memories that pop up in our consciences, soon to be forgotten.

So why do so many of us fail to change our behavior, even with our best intentions and efforts? There’s a lesson we can apply to help ourselves and our clients by taking a closer look at how resolutions really work, or when they don’t.

3 types of resolutions

A resolution is a goal we have set for ourselves. How we establish and articulate that target is incredibly important in determining our success in accomplishing it. There are interesting parallels with this kind of goal setting and how we manage our financial lives. People typically make three kinds of resolutions:

1. Outcome-based. These are resolutions where we establish a result we want to accomplish. For example, “I intend to lose 10 pounds.” It’s the result we want to reach that is specific and clear.

2. Input-based. These are resolutions where we lay out activities we are going to accomplish. “I’m going to go to the gym five times a week,” or “I’m going to stop eating dessert.” It’s a specific action that you intend to follow in order to accomplish your goal.

3. Purpose-based. Lastly, there are resolutions rooted in the intention behind our goals. “I want to lose weight so I feel healthier,” or “I want to lose weight so I can be a better example for my kids.”

Financial plans are built in a similar way, relying on:

1. Outcome-focused. The most common structure used by advisers, these plans focus on major goals like retirement or funding college education for children. These are plans where the end states are determined. We then make trade-offs with our resources to accomplish them.

2. Input-focused. These plans take into account all of the resources available to a person and then determine how much is possible throughout their lives. By inputting how much someone will save, how much they have in assets and how much longer they are willing to work, we can ascertain what is possible for them to achieve in their financial lives.

3. Purpose-focused. A purpose-focused plan determines what matters most to clients throughout their lives so that they can make the right decisions today in the context of what matters to them, not just in the future, but today as well.

(More: 5 ways to start the ‘purpose’ conversation with clients)​

How to stick to resolutions (and build a plan that works)

Most resolutions fail because we need all three elements to be successful. You need to have clear outcomes you want to accomplish. You need specific actions, or inputs, you are going to take to make it happen. And finally, to stay motivated, you need to articulate why the resolution matters to you. It’s the intention and purpose that will help you make it through the surprises and setbacks you’re likely to experience.

A financial plan is much the same. Good wealth managers define the goals and outcomes people want and then “do the math” with the inputs, but most of us have a major flaw in how we build plans. We don’t get enough clarity about the intention and purpose behind people’s priorities. This can make plans seem unconnected and irrelevant to a person’s everyday life.

Life is unpredictable and people will change their goals as life unfolds. Our “inputs” will be change too. There will be promotions and job losses, divorces and illnesses. A good planner can adjust a client’s plan to reflect a big life change. A great planner builds a plan in the context of an individual’s life intentions and purpose so that the plan is heart of the client’s entire financial life every day.

(More: The goal-setting process Warren Buffett uses to say ‘no’ and achieve more)​

Having it all

We all want it all, but it takes a change in behavior to reach the best version of ourselves. It’s hard, disciplined work. At our core, an indispensable adviser helps people apply discipline to their decisions, and nothing is more important than having purpose clearly defined.

Knowing what matters, and why it matters, is the key to helping people make conscious choices, whether it’s having another piece of that cheesecake or saving a little more for their next vacation.

(More: Stop asking for referrals. You’re better than that)

Joe Duran is founder and CEO of United Capital. Follow him @DuranMoney.