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. "I'm too busy for this."
I’m too busy right now to focus on that. These expatriates often have a money 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 for 5 plus years.
If you are working hard, shouldn't your money be working hard too?
Last year the US markets made a 29% gain. US dollar cash less than 0.2%.
See the difference? A few years back I had a good friend who claimed he wanted to talk finance, but was then too busy for the next 9 months.
That’s not too busy. We didn't point it out, but given we saw them several times at dinners and sporting events, it showed an inability to prioritize their schedule.
In our experience the most senior people in an organization in China (China CEO’s and Entrepreneurs) find it the easiest to book time in their schedule. Despite their crazy hours. Why?
They just book it in their calendar and make it happen.
It can be a breakfast or lunch so they can multi-task. It can be in the evening or weekend to include their spouse. If you are too busy to even decide, chances are you need a financial adviser to help.
Many of our clients are actually capable of managing their money. The don't because they know their schedule won't allow it. They also value family time. So they find the time to delegate it to a trusted professional advisor.
Do what busy people do and assign roles and delegate. Build your support team.
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 old's because “he isn’t ready to settle down yet”. Yet he has an encyclopedic knowledge of all the best dive sites this side of Dubai.
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 an expensively dressed person with a great job could have no money. Yet we see it often.
The failure to plan is another way of avoiding their money saving responsibilities and growing up.
Don't expect governments to be there. Governments in almost every rich country (except Norway) are not going to be able to afford to fund a good retirement system for their citizens in 2040 at current projections, You need to plan for yourself.
So if you haven’t saved enough, your lifestyle will be entirely in the hands of others who aren't likely to have the funds to help much.
3. A Trustworthy advisor is hard to find.
Many advisers would avoid listing this excuse in their article. We won’t. Few say this to their financial adviser. but we believe fear is a reason that stops people from doing things with their finances.
Knowledge is power though, so meet people and learn, read online and you’ll find yourself protected. When searching, you must...
Make sure you don’t lock your money in a long term investment.
Get all the detail on putting your money in and out;
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 a 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. It's too risky right now.
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 economy continues to recover steadily. History suggests that's a good time to invest.
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 during this period.
In fact the worst time to invest is when the situation looks the best. That's often just before the peak. We actually have a couple of clients we call the "counter indicators". When they call us to buy because markets have been good for a few years, we know to reduce risk in our portfolios and vice versa. When the markets have been negative for a while, perhaps a year or so, and they say "just sell" we know a market bottom is close.
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 will never show a neon sign that flashs “NOW ITS SAFE!!”.
So what can I do? Make an action plan.
We don’t mean a financial plan but an action plan on getting organizing.
Plan a time to meet with some advisers (possibly more than one group), a timeframe consider and investigate their options and check references, 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:
1. January – Meet 3 advisers and collect plans.
2. Chinese New Year – Review presented options.
3. February – Check References and details.
4. 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 2-3 times per year) to check in and make sure it is all progressing as expected, Then, update as required.
Don’t make excuses for another year.
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