Developing good habits, like eating healthy, exercising, and saving for a rainy day, is a challenge that we all share. Clients of financial advisors are no exception, as no matter how carefully advisors craft financial plans and formulate sensible strategies to help clients achieve their goals, the majority of those clients struggle with following through on their tasks, even though they are 100% on board with the strategies they’ve agreed to adopt!
Future self-continuity, i.e., the ability to relate to one’s ‘future self’, is one factor that may explain why some clients struggle with plans they know, on a practical level, make sense to follow, but still have difficulty following through on the tasks they need to carry out. Research in the area of future self-continuity (FSC) – which examines three general areas: relatability, vividness, and positivity – suggests that increasing future-self continuity (i.e., improving one’s ability to relate to their future self) can increase financial self-efficacy, leading to a higher likelihood that clients will follow their financial plans and carry out the tasks outlined in their plans.
The first area of FSC research, which examines relatability, asks how a person’s perception of their ‘current self’ compares to their vision of their future self, with respect to goals, values, and priorities. This is important because the more a person considers their future self a completely different person (versus an older version of themselves) the less likely they will be inclined to act on something today to benefit their future self. For example, someone who identifies their future self as a stranger may have a difficult time committing to saving for retirement on a regular basis, even though they may understand intellectually that it is for their own benefit. The second area of research, vividness, asks how clearly a person is able to envision their future self, factoring in physical and circumstantial changes. For example, a client who has recently divorced (or whose spouse has died) that is able to clearly envision a version of their future, without their past partner, may have an easier transition recovering from what can be a devastatingly difficult situation. And the third area of research, examining positivity, asks about the level of esteem one has for their future self and how important is it for the future self to be happy and successful. Which is essential for achieving goals in a financial plan, because the more a client feels their future self is worth planning for, the more likely it is that they will follow their plan.
Ultimately, the key point is that FSC is a useful (and simple!) tool that advisors can use to help clients better relate to their future selves, which can make it easier for them to follow the strategies implemented in their financial plan, as it’s the future self who will reap the rewards of their goals. Assessing FSC can also be useful for advisors to gauge any psychological gaps that may exist for a client between their current and future selves. Not only can advisors use these concepts to determine whether to check in with their clients more or less frequently (as clients who are less attuned to their future selves may benefit from more frequent reminders of why sticking to their plan remains important in the long run), but it can also help the advisor identify the underlying reasons why their client may find it challenging to stick to their plan in the first place.