You Should Never Walk Alone

Many people find financial planning a bit of a put off.  Budgets restrict my lifestyle.  No one told me about investment losses.  If it doesn’t work, why do it?

Here is reality.  To get financial planning “right” is really, really hard.  Even simple things are difficult.  There are almost no certainties.  The best you get is a balance of probability.  Like quantum physics except the math is easier.

When you think about it a little, you discover that over time, good financial planning is the process of becoming less wrong.

Why can we not get it right?

  • The world changes
  • Laws change
  • The tools change
  • People change their values and priorities

Even change changes. 

I have noticed that the business cycle is shorter.  Products last less long.  The media demands news well before it can mean anything.  Who saw the Apple change coming?  In the past 10 months Apple has shed more than $210 billion of market cap.  Does that matter?  I don’t know, but that is very nearly as much as Walmart is worth.  It must mean something.

The last change above, people, is the only one that is reasonably predictable.  Not in a year or even a decade, but we know that as people age, their priorities change.  For people in middle age, debt is a bigger burden because incomes tend to flatten.  For retirees, predictability becomes a bigger value than growth.  Lifestyle becomes less subject to inflation problems.  The time frame for the plan is short enough that it becomes manageable.  On the downside, any mistake can be catastrophic as there is little opportunity to earn back the loss.

So where to start?  Absolute control is elusive.  Decide that tendencies are what you want.

Know about where you are now.  Assets, liabilities, income, expenses, other commitments.  Who can help you?  Who is a burden?

Know where you have been.  How you came to be where you are now will give you insight into your personal behaviour, preferences, personal environment and ability to tolerate change.  Assess your standards and priorities.  Understand what you will not do.

Know where you want to go and when you want to get there.  Assess opportunities that have come clear from analyzing the past and present.  See what holes there may be in your skills and experience.

Find a guide.  Most people cannot maintain the discipline needed for the long time it takes.  They give up when the plan does not work as they expected.  They take shortcuts or rationalize their deficiencies.  They overlook obvious tools, problems and opportunities.  Guides help assign meaning.

A guide can help people find the holes in their idea and they can provide a conscience of sorts when people walk on the wrong path.  Sometimes they can drag you back from the railing on the bridge.

A guide knows where the tools are and how they work.  They can help with the inevitable compromises.  They can bring knowledge that is nearly invisible to an individual.

Symbiosis works.  A koan says, “You must do it by yourself, but you do not have to do it alone.”

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  866-285-7772

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 )

Google+ photo

You are commenting using your Google+ 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: