Stop Trying to Control Outcomes

behavior leads to resultsOur entire financial planning approach is aimed at liberating clients from the destructive obsession with trying to control outcomes. Instead of trying to engineer results, we concentrate on inputs, such as saving and spending, which are within our ability to control.

 

 

Successful Investing by Plan

We understand that many clients have difficulty not trying to control results since that is the central theme of almost every bit of financial media each day. This is exactly where the value of planning comes in. Successful investors act according to their plan; unsuccessful investors react to the day-to-day markets. Without an objectively crafted financial plan, investors are left to their own emotions and that can be very dangerous. In fact, this is the root cause of why many investors are so poorly prepared for their own financial future.

Trying to control outcomes might seem reasonable but in reality it is an obstacle to accomplishing what you want. I recall going to softball pitching lessons with my daughter (who ultimately pitched in high school and college) and hearing the instructor caution the pitchers against “throwing versus pitching”. That is, trying to aim the ball versus relying on body mechanics and muscle memory to pitch the ball to the desired spot. The very same principle applies to our financial lives. We can’t control all the variables.

 

 

The Truth about Investing

Many years ago we had a client who came in and proclaimed, “I need a 12% annual return”, thinking that somehow the cosmic universe would arrange itself to satisfy this need. No, the returns you receive are dependent upon your ability to emotionally handle short-term market declines and distinguish these from long-term increases. The greater your ability to recognize this, the higher your expected returns over time. Plain and simple; yet very, very difficult without a plan and a planner.

We are ultimately in the truth business. We provide our clients 100% honesty about the status of what they control, their inputs, versus their goals. Candor and transparency are as rare today among those calling themselves “financial advisors” as 30 years ago when we started our firm. How is your approach working? Ready for a change?

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