Financial planning has four aspects.
Were it not for financial tools, like investment funds, insurance, budget management tools, and the competitive market for debt tools, logistics would be the most difficult. Fortunately, a large part of any financial plan can be implemented much the way you would build a Lego model. History has evolved smart packages.
The vision and the strategic analysis is about being effective – doing the right things. Tactics and logistics are about efficient – doing things right.
Because each piece seems known and straightforward, many people decide this is the place to apply their do-it-yourself skills. It is not. You could do it yourself and you might save some fees, particularly with investment funds, or agreements like wills and powers of attorney. The savings will be minor compared to the risk involved.
Some people are willing to pay investment advisors, lawyer, accountants, and others because the probability of error is lower. If the low chance of error scenario works for them, why add risk? The value of the potential losses resulting from avoidable and known missteps is never factored in when assessing the value of do-it-yourself. Understand the idea of false economy. As my friend Moe used to say, “Cheap is expensive.”
Logistics is where the military spends their thinking time when it comes to war. In the 1991 Iraq war do you think it took the United States five months to decide what to do or do you think they spent the time organizing and preparing? Strategy and tactics are known. Doing it is another matter entirely.
Specialists know how. Use professionals for things that matter to you.
Strategy changes very slowly. Logistics change when some better tool comes along. Logistics keeps order.
The plan works if it is monitored. That involves three steps.
Record. In the beginning record the purpose and the reasons for each choice in the tactical set. Include the outcomes expected, when included. Record the progress of the step as it evolves.
Review As the plan develops, review the outcomes in the context of expectations. Most will not perform exactly as you expect. Certainly investments don’t. The review process allows you to decide the original plan was in error, or market events are fluctuating. A this point you can decide to amend your approach or wait. The value of a review against a template is it is coldblooded, Much less emotional input usually helps.
If there are new resources, you must go back and fit it into the overall plan rather than dealing with a single variable in the tactic set. Usually the question is between debt reduction, more savings, or improvement in the tactical tools.
Revise The last step is to revise if deemed necessary. Select a different method based on the same criteria as your first example so you have a template for the next review.
The 3 Rs. Record, review, revise. That’s how plans evolve to something better.
The obvious point is no plan is static. People who think a financial plan is done once -done forever, are catastrophically naïve. If you had finished a perfect financial plan in December 2019, how valid would it be now?
No plan is ever done.
A good plan evolves to a better fit with your life.
Logistics are the key to success.
Every competent military officer works hardest at logistics. “My logisticians are a humorless lot … they know if my campaign fails, they are the first ones I will slay” Alexander the Great
A well-designed plan is easier to administer.
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I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.
Be in touch at 705-927-4770 or by email to email@example.com