Be a better procrastinatoron Thursday, 9 January 2014. Posted in Financial Advice
I’ve been meaning to write the first blog post of 2014 for a few days now. Yes, a chest infection did slow me down. Still the main reason was procrastination. The real reason hit me whilst reading this very good Wall Street Journal article on procrastination, and how to do it better. Then I decided to use my procrastination as inspiration, and well… here is how we see procrastination getting in the way of people’s financial plans and goals for 2014.
Over the last decade of being a financial adviser, I’ve seen evidence of procrastination on people’s finances everywhere. It’s probably the biggest curse around since the inability and act and decide is its own decision. The decision to NOT act stops and slows many people’s portfolios to a crawl or leaves them dangerously un-prepared. Perhaps you can identify with one of these procrastinators.
1. The Too Busy
Saving: I’m too busy right now to focus on that. Often they have a chunk of change sitting in cash for months and years. I’ve truly lost count of the number of people I see who have had $100,000 USD sitting in an account gathering dust since the Beijing Olympics. Last year the US markets made a 29%. US dollar cash less than 0.2%. See the difference? I had one friend who claimed wanted to talk finance, but was too busy for the next 9 months. That’s not too busy. That’s an inability to prioritize and manage your schedule. In our experience the most senior people in an organization in China (China CEO’s and Business Owners) find it the easiest to book time in their schedule, despite their crazy hours. Why? They book it in and make it happen. It can be a breakfast or lunch so they can multi-task. It can be in the evening to include their spouse. If you are too busy to even decide, chances are you need a financial adviser to help, far far more than someone who has the time and expertise to manage their money at home. Do what busy people do and assign roles and delegate.
2. The Peter Pan.
I’ll start saving for retirement next year. Often we see this decision as part of a Peter Pan complex. You know the guy. The 43 year old man-child still dating 30 year olds because “he isn’t ready to settle down yet” with an encyclopedic knowledge of all the best dive sites/parties this side of Goa. Their inability to commit to a grown-up life style much less start planning for old age, is all part of the same problem. It used to surprise us that a stylishly and expensively dressed person could have no money, but you often see it with a Peter Pan. Governments in almost every rich country (Norway excepted) are not going to be able to afford retirement and health care benefits for their citizens at current projections, so if you haven’t saved enough, your lifestyle will be entirely in the hands of others.
3. But they are all scoundrels!
Many advisers would avoid listing this excuse in their article. We won’t. No-one ever says this to their financial adviser (well sober anyway) but it is a very common excuse that stops people from doing things with their finances, we have no doubt. Knowledge is power though, so meet people and learn, read online and you’ll find yourself protected. Make sure you don’t lock your money in a long term investment (there is no need), get all the detail on putting your money in and out, and ensure you know how your adviser is paid. Ensure you know exactly what assets you are buying. Ensure you don’t send money directly to your unregistered broker like this pink sheet scam. If you work with your adviser on a fee-basis and avoid lock-ins and stick to ETFs, chances are you won’t go too far wrong from there. Don’t use it as an excuse – take control.
4. I can’t decides
Their motto is “I have to think about it” closely followed by, “can we wait until the world environment is clearer?” There is one problem with this. The world situation is NEVER clear. But isn’t the world in financial crisis and recession still? Actually despite the headlines, the world is a pretty reasonable place right now. Yes Europe is hardly motoring and there are imperfections many other places. You can in fact make a very good return despite all that. The US equity markets had a great run 1995-2000 despite the Asian Financial Crisis. Those who sold after the Dot Com crash in 2002 missed the next 5 year run to 2007 and so on. Being scared is an emotion to be managed, not a rational reason not to invest. Recognize this and discuss it with your adviser and ensure you are well diversified across asset classes and time. But don’t ignore it and hope it goes away. The equity markets don’t ever have been Neon signs that flash “NOW ITS SAFE!!”.
We don’t mean a financial plan. We mean a plan to get started and get a financial plan in place. Plan a time to meet with advisers, consider their options and then a firm deadline to act. Treat your finances the same way you treat projects in your professional sphere. They are AT LEAST that important, arguably more so.
The plan would look simple, like:
- January – Meet 3 advisers and collect plans.
- Chinese New Year – Review presented options.
- February – Check References and details.
- End February – Make a decision and commence paperwork.
A two month plan to get your finances in order is very reasonable and achievable. Then once the plan is in place, you should meet you adviser regularly (say 3 times per year) to check in, have a coffee and make sure it is all progressing as expected, up updated as required.
Don’t make excuses for another year. Leave that for the manager of your favorite team.2014, Advice, Caterer Goodman, China Expat Money, Financial Advisor, Investment, Owen Caterer, Plans, Shanghai Expat