Retain Control of Your Financial Plan

Financial literacy has two parts, but many people hear about just one of them.  The parts are strategic financial literacy and tactical financial literacy.  As with most things we learn the tactical part first and gradually, or maybe never, find the strategic part.

The tactical part of anything is the how to do it part.  In this case, how mortgages work, how pensions work, how tax preferred savings plans work, how insurance works, what banks are for and a hundred more.  It is about product and technique and sometimes a conceptual idea.

If financial literacy stops here, people will tend to do poorly.  Tactics that have no overview look easy and are often misunderstood or overemphasized. Sometimes it pays to stop and ask yourself, “What’s this tool for?” and “Why do I care?” 

Those will lead you to strategic thinking.

Strategy can help you or your children understand questions like, Where does wealth come from?  Why was money invented?  What are governments for? What is compound interest about? How do investments work? What should I be doing about those?

All personal financial strategy involves questions.  What do I want?  What do I have to get it with?  Who is involved?  When do I need it?  Where will I be?  Why do I value this part more than any other?   Notice the “W”.

“W” is strategic.  “How” is tactical.

Eventually the two come together but not before the goal is known, the timing is known, the resources are known and there is a way to record, review and revise results as time passes and situations change.

In my experience, people who begin with tactics usually fail.  They have nothing to attach.

Tactics are complex and change often.  That is why you use specialists to help choose and implement the tool.  Tax accountants spend hundreds of hours a year keeping up to date.  Law and insurance changes regularly and are barely understood by people outside the profession.  You cannot be good at it without a huge time investment, so choose someone who is good at it as a helper.

Once you realize that all the others are helpers not planners, life will go better for you.  You are the planner. Strategist. You set the agenda and provide the resources.  You set priorities.  You establish time. You will win or lose depending on how well the plan works and adjusts to change.

Retain control of strategy.  Hire a tactician.  Make sure the tactician understands your strategy and finds tools that fit.  Make the implementation decision together.

Tactician should not make the decisions alone. It is like duck hunting.  A dog is good company, a friend and useful, but when it comes time to shoot, you don’t give the gun to the dog.

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.

Contact:  705-748-5181

2 Comments on “Retain Control of Your Financial Plan

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: