Much of financial planning requires making decisions. Many people have a problem with that because they want a perfect answer before they implement. Good enough for now is about as good as you can get it. Good enough for now works unless it is a decision that cannot change. Build flexibility into your plan.
The recent election of Donald Trump is a good case in point. There are innumerable predictions about what it will mean, often contradictory. The market will fall sharply and market will rise were two. Both were true in the first 12 hours.
All plans play out in the future. You can never know enough to get a perfect answer. Military people talk about “the fog of war.” Fog is uncertainty. It is inability to see past a certain future point. Incomplete or faulty information, misinterpretation or surprising conditions. Many plans are near perfect in the short run. They look like this photograph.
The reality of the future is we don’t know and worse, we cannot know.
In the short run, the path is highly predictable. There is a guardrail and easy steps to move forward. The more distant the goal the less clear are the steps and the guardrail. Even the road may not exist.
If you had to jump from now to the distant future in one step it would be a terrifying decision. You would have no idea of the conditions at the end.
No one does that. They progress along the chosen path until they know they must change their path. As you move toward the fog, you begin to see previously invisible or previously unusable pieces. It takes a massive fog to keep you from learning at least a little as you move toward your goal.
If you try to execute a perfect plan, you will fail. It takes a very clear day indeed to see the end of this road. Instead, make reasonable assumptions about the end, but be prepared to adjust. The ability to adjust is a skill that will serve you well in many situations.
The key to adjusting is to anticipate that you will likely do it. With that in mind, record how you have been doing and how that fits with your current place. Review your results and assess whether or not they are likely to be successful as you go another year on your course. If they may not be successful, revise your course. The 3 Rs (record, review, revise) are an important part of each plan. Most plans that fail have ignored them.
If you need help recording or assessing performance against a changing landscape, enlist the help of someone who is more familiar with what is going on and how it is going. You will be busy enough living your life that planning your life may seem not urgent. The important is seldom urgent.
You need objective oversight. Find an advisor who is willing and able to provide it for you.
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. firstname.lastname@example.org 866-285-7772