Colin Powell is a retired general of the army and Secretary of State during the Bush administration. He has proposed the Powell doctrine as a template to consider before employing the American military. In simple terms this is the look before you leap stage. As we will see some of the ideas translate well into the financial planning arena.
- Is a vital national security interest threatened?
- Do we have a clear attainable objective?
- Have the risks and costs been fully and frankly analyzed?
- Have all other non-violent policy means been fully exhausted?
- Is there a plausible exit strategy to avoid endless entanglement?
- Have the consequences of our action been fully considered?
- Is the action supported by the American people?
- Do we have genuine broad international support?
Other than international support, these can be financial as easily.
- Is a vital financial security interest threatened? Someday I will not work. On that day will I have money to meet my living costs? Will I have education funds for my children? Will there be a margin for error? Health issues?
- Do I have a clear attainable objective? Clarity means a particular target that is known in some detail. In finance it tends to be how much and when? Attainable relates to resources. The ones I have now and the ones I will acquire. It also addresses the selection of tools that will enhance the value of the resources and the nature of helpers I may employ.
- Have the risks and costs been fully and frankly analyzed? How sure am I of the resources? Death and disability are a reality. Divorce is not impossible. Special needs or special opportunity children. Aging parents. Career dislocation.
- Have all other non-violent policy means been fully exhausted? Presumably all will be non-violent, but have other methods , goals and issues been examined? Can there be others?
- Is there a plausible exit strategy to avoid endless entanglement? What if I change my mind? Flexibility is a key asset. No plan is risky if it is reversible.
- Have the consequences of our action been fully considered? If I decide to accumulate money, I have already denied any other use for it. I must know what I am willing to give up to get what I want. Lifestyle. Time. Nothing is free.
- Is the action supported by the family and other stakeholders? Business partners for example. I will need everyone onside because of the “give-up” thing. Sometimes I will need a cheerleader, other times someone to walk me back in off the ledge.
All action connects to strategy. The Powell Doctrine is a pre-strategy level assessment of need, situation and options. Essentially, it answers the “W” question – “Why?” Why provides motivation. To sustain a plan for 40 or 50 years, through good times and bad, will definitely require motivation.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.