Peaceful Wealth: Who is responsible?
Thursday, June 11th, 2009
R. Scott Maxwell, MBA
What role do you play on your financial ship of state?
Are you a Captain who regally dictates strategy and oversees the orderly operation and conduct of the vessel entrusted to your care?
Are you a Navigator who is always aware of your position and faithfully charts your course to determine how and when you will arrive at your intended destination while avoiding known hazards?
Are you a passenger who entrusts the operation and navigation of your ship to seasoned experts as you tend to other business in route to your booked port of call?
One of the many benefits of today’s investment world is your freedom to choose the role to which you aspire. Determining the best role for you is a personal choice based on your experience, your temperament and your time.
Unfortunately, many investors fail to embrace a fundamental truth of financial seamanship.
Never delegate responsibility!
Of the many lessons I learned as a young U.S. Navy Officer, none was more important than the sacred concept of responsibility.
Legendary Admiral Hyman G. Rickover, the father of our nuclear navy, said of responsibility,
“It can only reside and inhere in a single individual. You may share it with others, but your portion is not diminished. You may delegate it, but it is still with you. You may disdain it, but you can not divest yourself of it. Even if you do not recognize it or admit its presence, you cannot escape it. If responsibility is rightfully yours, no evasion, or ignorance or passing the blame can shift the burden to someone else. Unless you can point your finger at the man who is responsible when something goes wrong, then you have never had anyone really responsible.”
Today’s headlines shout out the vital importance of personal responsibility. Too good to be true sales pitches encouraging unwise borrowing have cost people their homes. The abandonment of risk management and the unquenched pursuit of speculative profit has left once storied financial institutions in ruins and sparked a dramatic and painful decline in markets worldwide.
Be it Captain, Navigator or passenger, you must assume responsibility for the finances entrusted to your care. Not everyone you meet is worthy of your trust. Schemes abound. Pirates roam the seas. Wisdom and discernment must drive your decisions. Speculative pursuits and get rich quick strategies carry painful consequences. Unnecessary fees siphon away your wealth. Unnecessary risks sabotage your future. Reckless trading and chasing yesterday’s returns diminishes your opportunity for long-term rewards.
Your embarkation call to action? Ask hard questions. Learn who you should trust and learn why you should trust them. Read the small print and understand the difference between a fee-only Registered Investment Advisory firm and a fee-based or commission driven broker. There are vast differences between a trusted advisor and a commissioned sales representative. A trusted advisor always puts your best interests ahead of their own. A commissioned sales representative, no matter what moniker they assume or which certification initials are printed on their business card, cannot avoid the inherent conflicts of interest that define the Wall Street sales machine.
You must also never lose track of the requirements of the mantle you assume.
Every good Captain needs a capable crew. Enlist and read the likes of Bogle, Bernstein, Fama, French, Malkiel, Markowitz and Siegel to man your battle stations and cover your flank. They understand how markets work and offer a prescription designed to make you into a battle tested and seaworthy sailor.
Every good Navigator knows their exact location at any given moment. Failure to pinpoint current coordinates makes future plots meaningless. It is impossible to determine the proper path to an intended destination when you have no earthly idea where you are. Know your destination and stay true to your checkpoints. Rewards and risks are inextricably related. A Navigator must anticipate the inevitable storms along their path. They must insure their vessel can withstand what may lie ahead or chart an alternate course better suited to their unique needs before they set to sea.
Every wise passenger trusts their Captain and their crew. They know their time and energy is best spent on the Lido deck of personal finance as they relish the opportunity to pursue their personal gifts and passions. They feast on the midnight buffet of global diversification. They research their destination and board the best ship available for their intended journey.
There is no hiding from the fact 2008 was a tough year for investors and retirees. You may feel like your financial ship is aground. You may be stuck in a foreign harbor attempting to wait out this storm or calm your fears about the future.
If so, then now is the time to act. Decide on the role that best suits your personal voyage. Vow to make wise choices. Hold yourself accountable. Hold others to a standard of excellence.
Your payoff will be Peaceful Wealth.
R. Scott Maxwell, MBA is a Vice President and a wealth and income solutions expert at Talis Advisors, a wealth management firm headquartered in Plano, Texas. Awarded the prestigious 2009 Five Star Wealth Manager: Best in Client Satisfaction for the Dallas/Ft. Worth area by Texas Monthly magazine, Scott is committed to teaching investors the truth about the stock market and how they can achieve Peaceful Wealth throughout their lives. Scott can be reached at 972-378-1794 or 866-608-2547 or via his web site at http://www.talisadvisors.com