In times of uncertainty, market volatility and ‘noise’ surrounding markets it can be challenging to know what to do and frankly – when to do it. This of course is magnified is an age and era in which the number of newscasts, video content and media projection is expanding exponentially. For context, YouTube alone receives over 30 million unique viewers per day, almost 5 billion videos are watched on YouTube every single day, and 300 hours of video are uploaded to YouTube every minute of every day. There is no shortage of opinion and as evidenced by the statistics – no shortage of content. This of course is but one site, and does not account for websites, written publications, and cable news which no doubt enhances the amount of content and coverage we have the ability to indulge in daily. So in times of uncertainty, when we may be unsure of the macro-economic indicators, forecasts on earnings, technical analysis, which sectors will perform best, and how to draw consistent income where do we go for answers on what we should be doing (or not doing)?
“No enemy is worse than bad advice” - Sophocles
When we examine any challenge, whether health related, economic, inter-personal or business related most of us form a common framework of response. That framework generally includes;
- Gathering information or facts
- Determining what we are hoping to achieve or solve for
- Defining measurable success
- Crafting a course of action
- Establishing ‘check in’ points to determine progress towards the stated objective
Although general in nature, we often use some form of this framework in multiple aspects of our lives. As an example, when we visit our family doctor they often have us fill out a brief questionnaire in the waiting room to determine some facts at outset, as simple as ‘why are you here today?’ to travel history, or family medical history. When we meet the clinician in their office, the questions move to more detailed questions such as what hurts, when and where? Sometimes the achievement is obvious, if you have a sore throat, one might simply aspire to not having a sore throat. Sometimes, it is a concern about the ailment being an indicator of a larger illness. This all occurs during the information gathering stage and discussion – in financial planning terms we would articulate this as ‘discovery’.
Discovery: Determining goals, objectives and concerns we wish to address, gathering facts and information that we will use to project and assess how you are progressing to the stated objectives
To carry to analogy further, sometimes my doctor wants to gather more facts or ‘test’ against certain issues. This could involve getting blood work done, taking physical tests, or simply testing against an initial prescription or course of care. However, once all the tests are back, received, and reviewed medical professionals have the ability to either assess, diagnose and prescribe a regime that will aim to achieve the objectives or refer to a specialist that can further assess or may be better suited to solve for a specific challenge – often referred to as a ‘referral to a specialist’. In financial planning terms – once facts are gathered, assessments and projections are completed, and solutions are presented, often we then are introducing specialists to assist in implementing these solutions. This could be as simple as having an investment specialist determine how best to achieve the rate of return required to meet your objectives at the savings rate required. Or, it could be an introduction to a lawyer or tax professional to tackle a specific gap or issue. This generally is shared with our clients during the ‘delivery’ phase.
Delivery: Sharing the quantitative findings of the analysis, providing the context to the suggested solutions and strategies, and determining together the implementation schedule of the plan itself
Finally, when I leave my doctor’s office they often wish to schedule a time to ‘check in’ and see if what was prescribed worked, to monitor progress, to ensure the desired outcome is achieved. This is no different in financial planning. Planning needs to be a continuous conversation, and plans need to be monitored and adjusted as the forward variables adjust. Any plan that is a ‘one time’ event has a shelf life, and that shelf life expires when a material change occurs (health change, cash flow change, market change, you name it). As a result regular monitoring by both patient and practitioner are key to achieve the determined and desired outcomes
To back-test this framework, simply think to yourself how high your trust level would be in a medical professional who asked limited questions, did no testing whatsoever and recommended a course of care? At minimum you may have a few follow up questions, and in true terms you may be questioning how they came to the conclusion that they did. This same consideration can be applied to what we here in media, from friends and colleagues and occasionally from advisors. If those dispensing advice are unaware of your unique goals, desires, concerns and objectives, have not reviewed the detail of your circumstances and abilities and have not spent time projecting and analyzing your situation before providing detailed written advice – you are correct to ask questions and determine if they have a fulsome view of your unique circumstance.
A written plan provides you a mirror to hold up against forward advice, answering the question as to whether or not the suggestion keeps you on track, fast tracks you, or send you off the rails. It is a deeply personal document, a roadmap, that begins with your directives and seeks to articulate your vision of success. Tactics to achieve can and will change (just as governments, laws and tax rules change) but having a document that cuts through the noise, is personalized and built with your objectives and personal data can provide clarity in times of uncertainty.