I am a coach of youth sports.....baseball, softball, basketball and soccer and I emphasize a long-term approach to improving and enjoying the game.
Financial planning should be done in much the same way, with a long-term focus - not just a plan to win this week's market game - but a long term strategy to win the game of planning for retirement as well as our children and grand children's educations.
In sports and financial planning it is essential to start with defining the objectives and goals. It does not matter if your goal is to be a better hitter or to reduce the risk and volatility of a portfolio...you still must start by identifying the objective.
The second step is to create a plan that helps to achieve those goals and put it in writing. Again, "batting instruction" and "practice," or investment analysis and portfolio construction.
The third step is to implement the plan once all parties agree on its parameters. Real hitting in game situations, or the actual portfolio that meets your needs.
The last step is the one most often ignored in Sports and in Financial Planning. That is monitoring the ongoing progress of success and identifying areas to improve. This is critical to long-term success. Anyone can hit a ball once or make money in a bull market - but the real value is in monitoring return and risk taken to achieve return. It is truly about having a plan that works for you today and adjusting that plan as circumstances and abilities change over time. A Solid Financial Plan should evolve based on ability and life circumstances.
I try every day to bring the same passion for coaching to my financial planning practice, because just as I cheer my athletes on to get better and work harder, I encourage my clients to be realistic about their goals and how they can achieve them. So while I will never tell a client to not take a trip or make a purchase, I will remind them that every financial decision is a choice and like our physical assets in sports there are and always will be limits. It is important to be realistic and yet strive to succeed.
The best coaches will never make a poor athlete great or a family with very weak finances wealthy - but the best coaches will help you do far better than you would on your own and help you understand what the next step is to succeed.
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