Our role as financial planners has always been multi-faceted. It naturally encompasses the quantifiable (think returns on investments) and also the less quantifiable (our role as a trusted adviser / counsel). I’m sure I have a bias when I say this, but I am a strong believer in the benefits of good financial planning.

These facets combine with the focus being on helping you to maximise the probability of achieving what’s most important to you in life. What’s hopefully apparent is that this is not primarily a money based discussion. It’s a values based discussion, with financial implications.

Let me use a simple example to highlight my point: schooling. My wife and I send our children to private schools because we want a good education for them, coupled with strong personal, social and community values. Yet this values based decision comes with a financial cost. I suspect that almost all decisions are made within this framework. I’m confident that this approach is something that we share with most, if not all clients.

Hence why in advising you it is critical that we understand the things in life that are important to you and what you want to achieve over the years ahead. The financial implications of these are then what we advise you on and deal with.

…it is critical that we understand the things in life that are important to you and what you want to achieve over the years ahead. The financial implications of these are then what we advise you on and deal with.

I like this diagram (courtesy Carl Richards, author of The Behaviour Gap):

Having been a financial planner for more than 20 years, and prior to that in financial markets for another 10 years, my thinking has naturally evolved over time.

So what I have learned:

• Help clients to articulate their values and what is important to them, including what gives them a sense of fulfilment, satisfaction and purpose.
• Set and prioritise goals.
• A planned approach will invariably be better than an ad-hoc one: ‘luck is what happens when preparation meets opportunity’.
• Logic, flexibility and simplicity are critical to success.
• Long term cash flow modelling is the foundation of sensible financial planning.
• Provide strategy driven advice.
• Risk matters. Risk is also not constant and you aren’t always compensated for taking more of it.
• Diversification for diversification’s sake can cause more problems that it solves.
• The large institutions have no perceived time horizon and hence take an investment approach that does not always dovetail with the interests of the individual.
• A good investment is to have a well thought out and robust investment philosophy.
• Having seen clients and friends struck down by death or serious illness, I am an advocate of appropriate insurance cover.
• Plan as though you will live to 100; prepare yourself as though you may die tomorrow. Robust and detailed estate planning is too important to do poorly or not at all. Your dependents deserve better.
• Focus on those things that you can change and if you’ve done what you can, then try to ignore what you can’t change.
• There is an awful lot of ‘noise’ be it in markets, economics or life. Try not to be distracted by it.
• Information is not knowledge. Knowledge is not wisdom. Leverage off other peoples’ knowledge and wisdom.
• Many years ago a colleague introduced me to this quote: ‘a cynic is what an idealist calls a realist’. A certain degree of cynicism is healthy. A questioning mind is important.
• The adage ‘if it’s not broke, don’t fix it it’ is a cop-out. Think this way: if something can be done better, then do it better!
• Embrace change…always learn, always evolve.

I’ll continue to add to this as it is a useful reminder for me and hopefully of value for you. But let me leave you with this to ponder: