“We start by ‘setting the course’, we succeed by ‘staying the course’” – Carece Slaughter
If you received the January 2017 newsletter “What can investors expect in 2017” written by Sean Quigley CFP® (Senior Wealth Planner) you will remember that we all had higher hopes for 2016 than what materialised. Many unexpected things happened (Trump being elected and Brexit to name a few) This trend appears to have carried through to 2017, with the firing of Pravin Gordhan and the subsequent “Downgrade” by two rating agencies so far.
What does this mean for your investment/financial plan going forward? Let me try and put it into perspective. The Blitzbokke (South African Sevens Rugby Team) were recently crowned 2017 World Series Champions, having made 8 finals and winning on no fewer than 5 occasions under coach Neil Powell.
Our Springbok Rugby team on the other hand is ranked 7th in the world, having lost 5 of their 9 games under coach Alistair Coetzee (after a very credible bronze medal at the 2015 rugby world cup.)
Why were the Blitzbokke so successful you may ask? More importantly, how is this relevant to financial planning and the investment advice you receive from a Financial Adviser?
I recently came across an article written by Thane Stenner (The Globe and Mail) in June 2016 that explained it as follows:
The three principles that apply not only to coaching but also to investing, are:
You need the right tools.
To be a great coach, you require the correct structures (assistance coaches, equipment, facilities etc.) and as an investor, you require access to the right investment opportunities or investment vehicles. Two of those vehicles for example are Exchange-Traded Funds (ETFs) and Index Tracking Funds. Both instruments are a great way to broadly diversify your portfolio and keep costs low.
Choose a game plan and stick to it.
Emotions are part of investing and sometimes it is difficult to filter out the noise and negative headlines, stay patient and position yourself for success. Choosing a realistic goal with your Financial Adviser and stay disciplined in following it, is a key pillar of investing success.
You can’t win them all, but having the right program helps.
History has shown that the market rewards discipline, diversification and patience over the long term. It is impossible to beat the market all the time, but having a long-term outlook with clear goals and not overreacting to short-term events will prevail in the long run.
The role of a Financial Adviser has evolved from simply selecting a “flavour of the month” Fund to include in a client’s portfolio (chasing performance) into more of a coach who counsels investors on the benefits of:
- Having a clear and appropriate investment goal
- Developing a suitable asset allocation building blocks (based on an investment objective) and having realistic return assumptions rather than “let’s hope”
- Minimizing costs (high cost eats into your growth over long periods of time), and
- Discipline (abandoning a planned strategy can be costly. Remember to rebalance often and don’t try and time the markets.)
Just like our sports coaches, Financial Advisers also now look to address their client’s emotional needs and must look to steer them through turbulent periods. This is not different to how the role of a coach like Neil Powell, has evolved from simply drawing and calling plays, to motivating his players and enabling them to succeed by choosing a game plan and sticking to it. In collaboration with your Financial Adviser, you too have a game plan (setting the course). Our advice is stay the course!
If you would like any further information regarding this article or your existing financial plan, please contact your trusted Harbour Advisory Wealth Planner.
We look forward to hearing from you.