All the best intentions in the world will not help you navigate treacherous ﬁnancial waters if you don’t have a detailed plan, and one that’s written down.
By independent financial planner Tim Mackay.
If you’re like me, your Institute membership certificate hangs proudly in your office. If you take a close look at the certificate, you will notice that the Earl Marshall of England issued the then-fledgling Institute its arms on 26 October 1929. Note that date, for it was an incredibly tumultuous period to be laying the foundations of our profession.
Two days prior the US market had plunged 11 per cent as the market opening bell rang. Two days later the US market fell 13 per cent, and the next day it fell another 12 per cent. That week – the Wall Street Crash of 1929 – was the most devastating stock market crash in US history and triggered the Great Depression. Can you imagine making any long-term decisions or commitments that week?
What on earth were our professional forefathers thinking, making such committed, long-term decisions in such volatile, uncertain times? How could they have possibly thought that the plans they were making would have any lasting impact?
As we look back with 20/20 hindsight, it is clear that our forefathers knew what they were doing and we have benefi ted greatly from that. They created a long-term plan in a period of incredible uncertainty and, importantly, they stuck to their plan.
As the world once more struggles to navigate its way through a tumultuous financial period, do you have a long-term plan in place to build and protect your family’s financial future? Building a comfortable and independent lifestyle needs more than just a drive to succeed and the skill to make it happen. It takes one of two ingredients: good luck, or good financial planning. Hopefully, as a diligent Chartered Accountant, you’re not relying on good luck.
We all know the old cliché that doctors make the worst patients but it doesn’t just apply to medicine. Unfortunately, it can also be applied to many accountants and their wealth plan. While many accountants do already have a written, strategic wealth plan in place, many others do not.
In my experience, most accountants have the intelligence, knowledge and skills to successfully manage their own strategic wealth plan. They are passionate about dedicating the time to actively manage their family’s fi nances to build themselves a more secure financial future.
However, some accountants lack the time in their busy professional lives to dedicate to planning their family’s finances. Others lack knowledge of investment theory to put their plan into practice, while others suffer from commitment paralysis – the inability to get off their posterior and commit their hard-earned cash to a perfectly good financial plan. Others are not sure how to do it but struggle finding someone they can trust in the financial planning industry.
Irrespective of which category you fall into, if you don’t have a financial plan, you will not do it. If you become beholden to what the market is doing around you rather than methodically working to your own strategic plan, you will be unable to make important financial decisions and your wealth will stagnate.
It is clear that if our professional forefathers had not adhered to their brave strategic plan through the Great Depression, WWII and then beyond, we would not be the proud profession that we are today. Likewise, whatever your dreams may be – a new home, expanding your practice, funding your children’s education, a secure retirement – committing to a strategic wealth plan can make it happen.
The future is always uncertain but the more tumultuous the times you live through, the more important it is to have a plan. Decide what is most important for your future, set your goals, determine how much you need to accumulate, and begin today by committing your plan to paper.
John Gough, a US temperance orator who preached of the ills of the demon drink, taught us: “You can commit no greater folly than to sit by the roadside until someone comes along and invites you to ride with him to wealth or influence”.
His compatriot Peter Drucker, who Business Week named ‘The Man who Invented Management’, argued: “Plans are only good intentions unless they immediately degenerate into hard work.” Get cracking, get inspired and get planning today. In the words of a well-known shoe manufacturer, just do it.
Tim Mackay BEc (Hons) MBA CA CFP SSA
I am an independent financial planner, SMSF expert and company director. I thrive on providing independent, expert financial advice to my wonderful clients. With international investment banking experience at Deutsche Bank and UBS in London and New York, I was recognised as SMSF Advisor of the Year by Independent Financial Advisor Magazine.