Dr Tom Mathar: Financial planners, stop defaulting to the plan
When something goes wrong on The Apprentice, Lord Sugar asks the same question every time. It isn’t: what did you learn? It’s not either: what would you do differently? The question is always: what was your plan?
The implication is, of course, that a plan is the mark of a serious person. The absence of one is almost a moral failing.
The same instinct runs deep in financial services. All of these have the same solution:
- A client is facing retirement and doesn’t know what it looks like.
- A family has inherited a property and can’t agree on what to do with it.
- A business owner is approaching exit and has no idea what comes next.
The answer: build a plan.
Planning has become the default response to almost every form of uncertainty. And this raises a question I’ve been thinking about lately: what if planning isn’t always the right tool?
The chef who opens the cupboards first
In 2001, Dr Saras Sarasvathy, a researcher at the University of Virginia’s Darden School of Business, set out to understand how expert entrepreneurs actually think. What she found disrupted conventional wisdom about decision–making under uncertainty.
The key insight isn’t that planning is bad. It’s that planning works well in stable environments with abundant data
Traditional planning, or what she called ‘causation’, works like a chef who selects a recipe, goes to the shops for the exact ingredients and executes. It’s logical, structured and goal–first.
But the expert entrepreneurs in her study did something different. They opened the cupboards first. They asked what they already had to hand (skills, relationships, resources) and built something from those materials.
They weren’t trying to predict the future and then plan toward it. They were controlling enough of the present to make a future worth predicting unnecessary. Sarasvathy called this mindset ‘effectuation’.
The key insight isn’t that planning is bad. It’s that planning works well in stable environments with abundant data. But in conditions of genuine uncertainty (the kind that surrounds most of life’s important decisions) the attempt to predict and then plan can be worse than useless.
Rather than beginning with goals – and the numerical targets that flow from them – Meghaan proposes starting with vision
It can generate false confidence in a map drawn for a territory that doesn’t yet exist.
I spoke recently with Dr Meghaan Lurtz on the Money:Mindshift podcast. Meghaan is a globally recognised academic and consultant in the psychology of financial planning. The conversation kept returning to a word that doesn’t feature much in financial planning orthodoxy: experimentation.
Her argument was this: if advisers can help clients stay open to experimenting their way toward change – rather than committing prematurely to outcomes or untested plans – they’re more likely not just to reach their goals, but to actually enjoy the process of getting there.
Vision first. Experiments next. Goals last.
On the show, Meghaan offered a sequence that inverts the way most advisers approach a client conversation. Rather than beginning with goals – and the numerical targets that flow from them – she proposes starting with vision.
Dr Tom Mathar: Why we need a new kind of financial adviser
Vision is a felt sense of what matters and what would constitute a life well lived. From vision, you move into experiments: small, bounded, reversible actions that generate real–world data. Goals come last. And they become far more meaningful and motivating when they’re built on what clients have actually learned about themselves.
Her point: if you start with goals, you get compliance. Clients agree to a target because it seems reasonable or because their adviser recommended it. But if you start with vision and move through experiments, you get something closer to commitment. You also get better data about what the client actually values in practice rather than in theory.
The retirement spending problem
I know that the ‘retirement spending puzzle’ is something advisers think a lot about. Clients who have spent decades building a portfolio find it extraordinarily difficult to draw from it. They know, intellectually, that their cashflow model says they can afford to spend. They agree with the logic. And yet then they don’t spend.
I spoke to a financial adviser recently who told me about a client of theirs with £5m in their retirement pot. They live modestly. Their biggest annual indulgence is camping in France. When that adviser told them that they really can afford much more than these camping trips, their client pondered: perhaps we ought to buy a new tent.
The debrief at the next catch-up is very important. Only the debrief turns raw experience into usable insight
Experiment framing offers a way through. Rather than presenting a spending plan (which implies a permanent shift in behaviour and identity) an adviser might instead say: let’s do a little experiment. Get the new tent, but on your next trip to France, you also get a break in a five–star hotel. Do something that feels slightly uncomfortable. Don’t rationalise it down. Then come back and tell me what you noticed.
This reframes the ask. It’s not a commitment to change. It’s not ‘become a spender’! It’s a trial. An experiment.
The debrief is where the real work happens
Meghaan was clear that the experiment is only as useful as the conversation that follows it. The debrief at the next catch-up is very important. Only the debrief turns raw experience into usable insight.
The questions that matter aren’t “did you enjoy the five–star–hotel?” They’re more specific. What surprised you most? Which parts felt worth it, and which didn’t? At what point did spending start to feel superfluous. And why? Would you repeat this, or would you do it differently?
What that conversation produces is what Meghaan calls emotional data: real–world feedback about what a client actually values when they encounter it, rather than what they imagine they’ll value from behind a planning spreadsheet.
The next time a client presents a genuinely thorny problem, try resisting the pull toward the plan
Perhaps the client finds that the luxury hotel felt hollow but the experiences – the guided tour, the spontaneous dinner – felt worthwhile. That’s information. It’s something you can work with as you evolve the spending (wait for it) plan.
One question worth asking first
The planning instinct is deep–seated in this profession. For good reasons, of course. Plans provide structure. They give clients something to hold onto. They give advisers something to point to. But structure built on assumptions that haven’t been tested is not the same as structure built on evidence.
The next time a client presents a genuinely thorny problem – a retirement they can’t picture, a transition they’re dreading, a decision they keep deferring – try resisting the pull toward the plan.
Before you reach for the cashflow model or the goal–setting framework, ask a different question: what would a good experiment look like here?
Dr Tom Mathar is head of Money:Mindshift at Aegon
