31 Reasons Why You Need A Financial Adviser

Someone once asked me that if I was any good as a financial adviser, why was I working as one and not simply making my money by managing my own investments? I thought to myself, that’s an interesting yet naive question.

So I decided to list 31 things good financial advisers will do for their clients, and why you need one. Here it goes:

  1. Takes as much time as necessary to genuinely understand where you are now, where you want to go, what help you need/want, and most most importantly, why.
  2. Helps define your goals, aspirations, desires, and fears.
  3. Understands what ‘truly wealthy’ means to you (because money is simply a means to an end).
  4. Thoroughly reviews your current position, then studies and analyses multiple scenarios/strategies to help enhance your current and future position.
  5. Will create an initial plan, which is simply a starting point, and make adjustments along the way to help support your goals.
  6. Helps makes wise choices about cash flow, management of debt, education funding, tax efficiency, personal insurance, estate planning, and investments.
  7. Puts in place strategy and structure to help achieve your future goals.
  8. Will explore all asset classes to help achieve your goals.
  9. Not only manages investments, but also manages investors.
  10. Helps you decide how, where, and when to invest.
  11. Helps match your balance sheet to your life.
  12. Will measure your performance not to an index, rather, to your personal goals.
  13. Helps you make better decisions with your money in the face of uncertainty and fear.
  14. Arms you with information to help you make better decisions.
  15. Helps reduce the uncertainty and anxiety that comes from making important financial decisions with your money.
  16. Stays on top of economic, market, and legislative changes so you don’t have to.
  17. Proactively keeps in touch with you.
  18. Liaises with your other professionals, and co-ordinates your banking, personal insurance, and estate planning with specialists.
  19. Gives you back time so that you can spend it on more important things in your life.
  20. Advises on the optimal mix of investments for you so that you can maximise your rate of return for a given level of risk.
  21. Monitors and oversees your investments.
  22. Maintains financial records on your behalf, such as tax reports, cost basis information, wills, and legal documents (basically your financial life).
  23. Acts as your sounding board.
  24. Is the ‘middleman’ between you and stupid.
  25. Provides as unemotional and unbiased point of view.
  26. Has your back.
  27. Is honest with you – they’ll tell you what you need to hear, not what you want to hear.
  28. Introduces you to the right people.
  29. Helps consolidate and streamline your affairs.
  30. Shares experiences of many other clients who have faced or are facing circumstances similar to yours.
  31. Get’s shit done (because you probably won’t).

It’s always simpler to do nothing. Chasing something you want is hard work – I guess that’s why not everyone gets what they want in the end. Personal finances are easy, right? Wrong. On our own, most of us lack clarity and objectivity, we get stuck in our own heads, we make emotional and careless decisions. We’re most likely busy doing other things in our lives, and we don’t have the information, resources, or time to sit down and dedicate thought, energy, and focus that personal finances take to make great decisions over the long-term.

Engaging an experienced and professional adviser to help you create your own personal financial blue print and game plan will help you understand your current position – your status quo, and more importantly what you need to do to get to where you want to go.

Asking others who are strong in areas where you are weak to help you is a great skill that you should develop no matter what, as it will help you develop guardrails that will prevent you from doing what you shouldn’t be doing.

– Ray Dalio

I’m curious. If money is the vehicle, what’s the destination?

When Life Throws You Lemons, Make Lemonade

Like most Collingwood supporters, I too thought we were going to walk away from the MCG on Saturday afternoon with the silverware. Collingwood lead the Eagles for 104 minutes of the game, and the Eagles lead the Pies for just 8 minutes of the entire game. Alas, it wasn’t meant to be, with the Eagles ahead when it mattered.

Whether it’s football, our finances, our personal goals, or our own lives, perspective and context can help you not only understand where you stand, but also help us become far more appreciative and grateful for what we have.

Here are 8 facts that may help us appreciate the world we live in today:

  • In 1950, the number of people in extreme poverty was 75%. Today, that number sits less than 10%.
  • Child labor has been reduced by more than 50% only in the last 16 years.
  • Close to 20% of males born in the US died before their first birthday in the year 1900. Today the mortality rate doesn’t reach that high until you reach age 62.
  • What used to be reserved for the world’s elite, world literacy has increased from 35% in 1950 to more than 80% of people today.
  • Progress in health is equally as astonishing. In 1800, more than 40% of the world’s newborns would die before the age of 5. Today, that number sits at less than 5%.
  • The share of homes that had electricity in 1870 was exactly zero. Today the proportion of people with electricity is 85%.
  • Between 1950 and 2009, the rate of death in traffic accidents fell six-fold.

Here are 5 facts that may help you put the current financial market into perspective:

  • The stock market has been up 3 out of every 4 years.
  • Less than 5% of the time has the market finished a year worse than being down 20%.
  • 2008 type scenarios are extremely rare. Only 3 times since 1825 did the market finish a calendar year down 30% or worse. That’s about once every 63 years.
  • Over the last 30 years, the stock market has declined 46% and 48% over an 18 month period, yet during this same time has grown by 8% pa (including dividend and adjusted for inflation) – which is around 1,892%.
  • The current bull run is the second longest in history.

Here are 7 facts that should help put the Pies’ performance into perspective:

  • In 2017 Collingwood finished 13th on the ladder.
  • In 2017 the nation was calling for Nathan Buckley’s head.
  • In 2018 Collingwood had one of the longest ‘big name’ injury list in history.
  • In 2018 Collingwood defied all odds.
  • In 2018 Collingwood finished 3rd on the ladder.
  • In 2018 Collingwood annihilated the reigning premiers in a preliminary final.
  • In 2018 Collingwood made the grand final – they lost by 5 points.

For a club that was in the doldrums just 12 months ago, to have come this far in such a short space of time, should be commended for their hunger, discipline, focus, and drive – a remarkable performance and achievement.

As human beings we seem to make the rules for success very difficult, yet the rules for failure are super easy. Think about it for a second. What needs to happen for you to be happy in life? A whole damn lot I would guess. And what needs to happen for you to be sad or angry? All you probably need to do is stub your toe on the corner of your bed! – Am I wrong?

Without context and perspective, human beings find appreciation and gratitude difficult. The lives we live today are likely to be better than the lives our parent’s lived. The lives of our children are likely to be better than our’s. We always have the rest of today, and tomorrow to better ourselves – the choice is ours.

What we focus on is what we become. How we look at things is what we see. Our perception is our reality. Great things take time. As they say, Rome wasn’t built in a day. For my dear-loved Pies, we’ve built a great young list, a unified team, and a culture of ‘never say die’. I look forward to the joys of 2019.

I guess things could be worse, right? I mean, you could be an Essendon or Carlton supporter.

You’re Being Fooled Into Overpaying For Underperformance – Here’s How

When people ask me what I do, I tell them I’m in the business of helping people make money. The business we’re really in though, is helping improve the lives of our clients. It comes from the belief that life is about more than money. I believe money is an enabler – it provides us with options, choice, and flexibility. So if we can help our clients preserve and build their financial wealth, we can help them live a more meaningful and fulfilled life – a life that is truly rich.

Sadly, most people never achieve a life that is truly meaningful and fulfilling – true wealth. Why? Because they’re focused on the scoreboard, and not the process. They’re focused on chasing the money.

Enter the world of investments, stock brokers, financial advisers, fund managers, and high flying financial institutions. If you’re not careful, you might be sailing toward financial freedom with a hole in the bottom of your boat. That hole, is in fact lining the pockets of those purporting to be helping you sail toward the sunset.

When was the last time you looked at your superannuation or investment portfolio statement? Your portfolio has probably grown, especially over the last ten years, so you haven’t taken too much notice. The real question is, how much have you left on the table?

Australians have around $2 trillion sitting in superannuation, which has attracted fund managers like bees around a honey pot. And Australian are paying some of the highest fees for the management and oversight of this money. In fact, last year, Australian’s paid $31 billion in superannuation fees – totaling around $230 billion in the last decade.

So what can you do about it? Here are three things to consider:

1. Fund Fees

When it comes to truly understanding the cost of your investments, it’s hard enough for the professionals to do, let alone the general public. There are many hidden costs that lie beneath the surface – here they are (average):

1. Expense ratio – 0.90% pa

This covers marketing and distribution cost, as well as the management of the portfolio. Typically, this is the only fee investors are aware of.

2. Transaction costs – 1.44% pa

Typically investment managers buy and sell frequently. And with these transactions comes transaction fees. There are three types of transaction costs: 1) brokerage, 2) market impact, and 3) spread.

3. Cash drag – 0.83% pa

This is the portion of your portfolio that is invested in cash. It hurts your return over the long-term because of the missed opportunities in the market.

5. Taxes – 1.00% pa

When you by into a fund, sometimes you’re being taxed for other investors’ gains.

The total of these fees can be as high as 4.17% pa. Although on face value these fees don’t seem high at all, when you compound these costs over long periods of time, it will blow your mind. The above list didn’t even include performance fees!

Here’s what happens when you invest $100,000 into the market with a 7% pa return. The compounding value over 50 years is almost $3,000,000! Let’s start deducting some fees from this return – here’s what you’re left with when you take 1% and 2% in fees:

Even a small number like 2%, compounded over a long period of time, can lead to financial ruin. Jack Bogle, the founder of Vanguard once said:

You put up 100% of the capital, you took 100% of the risk, and you got 33% of the return!

2. Chasing Performance

Forget fees. Just invest in the top performing funds, or sell before the market falls and buy before the market rises (market timing). Easier said that done.

A) Chasing the top performers

Over the last 15 years, almost 80% of all Australian fund managers have failed to beat the broad Australian share index. And after 15 years, only 56% of Australian find managers survived.

Over the last 15 years, almost 90% of all international fund managers failed to beat the broad international share index. And after 15 years, only 46% of international fund managers survived.

B) Timing the market

Researchers Richard Bauer and Julie Dahlquist examined more than a million market-timing sequences from 1926 to 1999. Their research concluded that by just holding the broad market index outperformed more than 80% of market-timing strategies.

Clearly, neither of these strategies put the odds firmly in your favour. In fact, they’re akin to gambling more than anything. Making money in the markets is tough. So if you can’t beat the market by hiring the best, what to the the real experts recommend you do?

3. The Advice

Making money in the markets is tough. The brilliant trader and investor Bernard Baruch put it well when he said:

If you are ready to give up everything else and study the whole industry and background of the market and all principal companies whose stocks are on the board as carefully as a medical student studies anatomy – if you can do all that and in addition you have the cool nerves of a gambler, the sixth sense of a clairvoyant and the courage of a lion, you have a ghost of a chance.

Jack Bogle says understand that what appears to be success in financial markets could just be dumb luck:

If you pack 1,024 gorillas in a gymnasium and teach them each to flip a coin, one of them will flip heads ten times in a row. Most would call that luck, but when it happens in the fund business, we call him a genius!

Warren Buffett wrote this in his 2013 letter to Berkshire Hathaway shareholders:

My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers

He even made a bet in 2008 and put his money where his mouth was. You can read my note about it here.

It’s super important to know that not all costs are bad. The right financial adviser can help you make better decisions over the long-term to save you money. Vanguard recently published a study to help quantify the value of a good adviser.

1. Suitable asset allocation – 0.75% pa

2. Cost effective implementation – 0.70% pa

3. Rebalancing portfolio – 0.37% pa

4. Behavioural coaching – 1.50% pa

Total – 3.32% pa of value added

This does not include any other benefits or value of a good financial adviser, such as strategic and structural advice. Compound that and see what your portfolio looks like.

Next time you pick up your investment portfolio statement, think twice about what you’re doing. Are you 100% sure the financial odds are firmly in your favour? Fees are the silent killer in your portfolio, and only a handful of funds beat the market consistently and over the long-term, and much of this can be attributed to randomness.

Being in the market, while minimising costs, can empower you to getting the real financial freedom you deserve.

Source: Forbes – The real cost of owning a mutual fund 2011, Visual Capitalist, Vanguard, SPIVA, Berkshire Hathaway Shareholder Letter 2013

Time or Money: Which is More Important?

It was only after having kids I realised how much time I really did have on my hands – I mean, what on earth did I do with it all!? Any spare time I now find myself with, I ask myself three questions:

  1. What needs to be done, and what would I like to do – Mowing the lawn, washing the car, or taking the kids to the park?
  2. What’s really important – time with my kids.
  3. Can I outsource the rest – yes.

For me, my family and kids are the most important thing in my life (after my health, because without it I can’t enjoy and provide for my family). More often than not I find that I somehow convince myself that I’ll get around to doing the other two things, such as mowing the lawn and washing the car because this time it’s different! Time and time again however, the grass gets longer, and the car get’s dirtier. Without exception, I give in. I’ll arrange for Victor the lawn guy to come over and do the lawn, and the car will be dropped off at the car wash whilst we’re at Westfield Shoppingtown. Inevitably, the cost of mowing the lawn and cleaning the car is always more expensive because I left it for so long and it got so bad. No brownie points even though I had good intentions.

Our time is so valuable, yet I think many of us don’t realise this. Realise it not intellectually, because I think most people understand the concept of finite time, but understand it emotionally.

We all have 10,080 minutes each week. Let’s say we sleep for 7 hours each day (2,940 minutes each week), we’re left with 7,140 minutes each week to do the things that are most meaningful and fulfilling. In one of his talks, Peter Attia poses the question:

I will be willing to bet that not one of you, if you were offered every dollar of his (Warren Buffett’s) fortune would trade places with him right now.

He goes on to say:

And you would all intuitively say no, I think, because you realise that time matters more than money. And I would also bet by the way, that he would be willing to be 20 years old again if he was broke.

The question Attia asks is incredibly thought provoking. Sure, I could have all the money and fame in the world. I could travel to anywhere I like, I could meet anyone I wanted to meet, and I could buy anything I wanted to have. Notwithstanding Warren Buffett’s fortune, there is no way I would be willing to trade places with him – would you?

Researchers at Harvard published a paper after studying the spending habits of more than 6,000 people around the world. Here’s what they found:

Despite rising incomes, people around the world are feeling increasingly pressed for time, undermining well-being. We show that the time famine of modern life can be reduced by using money to buy time. Surveys of large, diverse samples from four countries reveal that spending money on time-saving services is linked to greater life satisfaction. To establish causality, we show that working adults report greater happiness after spending money on a time-saving purchase than on a material purchase. This research reveals a previously unexamined route from wealth to well-being: spending money to buy free time.

In our everyday lives we outsource and spend money on so many time-saving purchases. From Friday night take-away, buying fruit and veggies from the market, to having our cars serviced. Not only do these purchases save us time, some of them require more skill and expertise than others – and we’re happy to pay a premium for it.

In the world of money management, the amount of time, focus, attention, and expertise that is required is enormous. Not only are the above factors required, the most underrated factor, I believe, that is required is having the ability to control human emotions.

Here’s how I think about time and money:

  1. Trade money for anything that is below your hourly wage.
  2. Trade money for anything that allows you to spend more time on things you find more meaningful and fulfilling.
  3. Trade money for memories.
  4. Trade money for anything you’re not an expert at – you’re likely to have no idea what and how to do it, if you do know how, you’re likely to take twice as long, make a mistake, or not optimise the outcome.

Never discount the concept of time and how a precious commodity it is.

Here’s Why Your Gym Routine Sucks, And Why it Makes You Unhappy

It was pouring down with rain as I ran from my car to the gym. Although the roads were a little slower that morning, I made it to my HIIT class in time (yes, I’m a fitness First member – high five!).

Whenever I’m at the gym, 99% of the time I’m training in a group class. A class with a small group of people and a trainer. What I really like about these classes is that there is a set time, usually 30 or 45 minutes. There is a set program. There is someone I’m accountable to (other than myself), and there is someone pushing me to go that extra rep, that extra kilo, those extra 5 seconds. As painful as it is whilst I’m training, I reap the rewards later (as long as I don’t eat too much pasta over the weekend…you know what I’m talking about!).

This class in particular intrigued me. There were two ladies who caught my attention (and not in that way). During each and every exercise, during each and every break, these two ladies were chatting away – non stop. Let me make one thing clear, there is no judgement here, just an observation.

We were all doing the same exercises, pushing ourselves to the max. I burnt almost 500 calories during that class, with an average heart rate of 150 bpm, and a max heart rate of 191 bpm. I think I’m reasonably fit, and by the end of this class I was completely knackered.

Now, unless these two ladies were super fit (which they may very could have been), I’m unconvinced they truly got what they could have got out of the session from a fitness point of view.

Why am I telling you this story? Because I believe it relates so closely to investing, our wealth, and our personal goals. How so I hear you ask? How many times have you found yourself wondering why you’re not achieving your goals, whether these may be from a health and fitness point of view, financial, or personal?

Just because you have engaged a financial adviser, just because you have a coach, just because you have a personal trainer, it doesn’t guarantee you success. You have a massive part to play in your success.

Your coach, whether fitness, personal, or financial, can help you set your goals, set the program, the exercises, he or she can be there to hold you accountable, but unless you’re doing your bit, the chances are you’ll fail. At our recent wealth breakfast, Paul Roos is quoted saying, “there’s no doubt they had a belief in me and trust in me, I think they also felt just because I arrived they we’re going to win games of footy. They’ve got a fairly big part to play in whether they win or lose.” – referring to when he first arrived at Melbourne Demons footy club.

How do you go from simply wanting something, to feeling like you’ve got your back against the wall and will actually do something about it?

The Power of Goal Setting

Almost three years ago I quit my corporate job and ventured down the path of one of my biggest goals – setting up my own business. The concept of goal isn’t exactly ground breaking. Yet most people don’t have a clearly defined set of goals. It was only a few months ago however, I started to write down my goals – personal, family, relationship, financial, and business. I’m clear on my ‘action plan’, the ‘outcome/result’ it will provide me, and my ‘why’.

Yale researchers conducted an intensive study back in 1953. They interview the graduating class just before they left school. They asked the students “Do you have a clear, specific set of goals with a written plan for achievement?” Less than 3% of the students answered “yes”.

Then, 20 years later, the researchers went back and interviewed the class members again to find out what their lives were like. They noted that the 3% that had written their goals for a specific plan seemed to be happier and more well-adjusted than the others. They also found that the 3% group was worth more in financial terms than the other 97% who did not have clear goals.

I believe most of us have goals, and most of our goals are not that inspiring – inspiring enough for us to jump out of bed each morning. When people ask me what I do for a “job”, I tell them for me it’s not a job. It’s so much bigger than that. For me, there is genuine meaning and fulfillment. I like to think of these as meaningful goals. Goals that inspire me to do even more.

The Game Plan

Here’s what worked for me:

1. I Wrote Them Down

Sounds like a waste of time doesn’t it? Believe me, there’s nothing more important. There’s also something about writing down your goals. Studies have shown you are not only acknowledging to your conscious mind that you’re dissatisfied with where you are right now, but also your subconscious mind.

People generally take action when they reach a threshold. When you’re comfortable with where you are right now, it’s unlikely you’ll take action.

2. I Got Clear on my ‘Why’

Have you ever opened the fridge and last night’s birthday party cake was starring you in the face? The more we tell ourselves we don’t want the cake, the more our mind tells us to go and eat the cake. If your why is to simply ‘lose weight’, it may not be enough. But if your why is to stay fit and healthy to be able to see your grandchildren grow up, all of a sudden your why has so much more meaning, is so much more powerful, and is more likely to stop you from eating the cake.

By getting clear on your why, you will find your purpose. And what you’ll find is that your purpose is far stronger than the outcome. The purpose of your goal is not the result. It’s what the end result will give you. Knowing this will help you through the toughest times.

For me, it was about my children. It was about creating a life for them that I never had. It was about creating options and flexibility. It was about creating a legacy.

3. I Took Action

Someone once told me that ideas suck, and that action and execution is key. I found myself always looking for excuses. It’s not the right time. I’ll do it next quarter. I’ll do it when the kids are older. There was always an excuse. Something magical happened however, when you know what you want to achieve, and more importantly, why you want to achieve it, it creates an unstoppable force that enables you to take action. Knowing full well that the status quo was not something I was going to resort to.

I was a perfectionist. It stopped me from getting things done. I’ve learnt however, that perfection is the enemy of execution. As long as I get things 80% right, I’m happy to drive forward and work on the rest of the 20% as we go.

You need to work hard for what you want, engaging someone else to help you doesn’t mean you relinquish all responsibility for action. Other people can help guide us, hold us accountable, and even push us when we need them to. Getting what we want isn’t easy – if it was, we’d all be happy and fulfilled. It takes time, clarity, purpose and commitment. Blaming others is the easy way out. Blaming ourselves is the most difficult.

Take a step back and find out what’s not working for you and take action.

Today’s The Day – Half a Billion Dollars, 16 Years in The Making

They say dreams are born during childhood and suffocate during adulthood.

It was July 20, 1985, at 1:05 pm, the marine radio crackled to life in Mel Fisher’s Florida Keys office, “Unit 1, this is Unit 11. Put away the chart’s, we’ve got the Mother Lode!”

Sunken treasure. Pirate gold. Long John Silver. Fifteen men on the dead man’s chest — Yo-ho-ho, and a bottle of rum! Mel Fisher was a treasure hunter. Inspired after having read Robert Louis Stevenson‘s Treasure Island as a boy, his heart was eventually set on the search of the Spanish galleon Nuestra Señora de Atocha – a royal galleon with 40 tons of gold and silver aboard which sank in a devastating hurricane in 1622 and was never found.

For 16 years, Mel Fisher searched the sea bed for the lost galleon. In the process, he lost a son and daughter-in-law, when the boat they were on capsized in 1975.

This man went out on search every single day for 16 years. Can you imagine coming home to your wife each day, who asks you, did you find anything today dear? To which you reply, not today honey. For 1 month, 3 months, 6 months, 12 months, every day, for 16 years! Can you imagine if he stopped searching after 12 months, 18 months, or 2 years!?

Why didn’t Mel stop searching? I mean, so many people set goals but never quite achieve them. Setting goals are easy. Just think back to how many time you set yourself new goals each new year’s day? How long did it last? Maybe your goal wasn’t compelling or inspiring enough? Maybe the goal you set for yourself wasn’t even exciting enough for you?

What made Mel chase his goal for 16 years without any bit of evidence he was anywhere near achieving it along the way? It’s that leap out of bed in the morning feeling. It’s when you don’t think about work as being work. Anyone that’s working towards something knows what I’m talking about. The vision, the excitement, the growth, absolutely loving the journey.

Do you think Mel Fisher would have given up on his dream if he didn’t find the Atocha after 16 years? What about after 17 years? 18 years? I’m a massive believer in purpose – why do you want what you want? What will it bring you? Once you know why you’re doing what you’re doing, you’ll always find ways to make it happen. Reasons come first, the answers follow.

The Atocha was added to the Guinness Book of World Records for being the most valuable shipwreck to be recovered (estimated at $400,000,000). Mel Fisher’s mantra each and every day during the years-long search for the Atocha, “Today’s the day.”

I Sat Down With One of The Wealthiest Families in The Country – Here is Their Advice

Have you ever wondered how you could be as financially successful as the country’s wealthiest? I recently sat down with a family member of one of the wealthiest families in our country and asked them what they believe are the ingredients for long-term, sustainable wealth. Here is their advice.

1. Values

Be clear on your values. What is most important to you? Family, freedom, happiness, joy, growth, contribution? Spend time clarifying your values, and discuss them with your family and children.

Spend time uncovering what it is that your children value also, and why. And then dig even deeper. What are the rules for your values – what needs to happen for you to feel joy, to feel happiness, for you to feel as though you’ve made a contribution?

Your values are your blueprint. Your values shape your beliefs and your beliefs influence your decisions, so be clear on them.

2. Goals & vision

Once you have clarified your values, start setting your goals. Break them up into short (1-2 years), medium (3-5 years), and long-term (5+ years) goals. Put a time frame next to them, and a value. Most importantly, write them down! These should be revisited and reviewed regularly – at least once, possibly twice a year depending on your situation.

We spend so much time setting goals for our businesses, and we spend more time planning our annual holidays than we do our money and finances.

A Harvard Business School MBA study asked one single question about life goals, “Have you set written goals and created a plan for their attainment?”

Prior to graduation, it was determined that:

  • 84% of the entire class had set no goals at all,
  • 13% of the class had set written goals but had no concrete plans, and
  • 3% of the class had both written goals and concrete plans.

The results?

Well, you’ve likely somewhat guessed it. 10 years later, the 13% of the class that had set written goals but had not created plans, were making twice as much money as the 84% of the class that had set no goals at all.

However, the kicker is that the 3% of the class that had both written goals and a plan, were making ten times as much as the rest of the 97% of the class.

3. Talk to you children about money

We can never be too sure whether its right to talk to our children about money, let alone when is the right time – it can be a little embarrassing.

The advice is to talk to your children. Whether it’s around the dinner table, or while watching the footy, you’re already spending time together, so add it to the agenda – it helps instill strong values earlier on in their lives.

We allow our children to ride their bike without training wheels, we allow them to drive their (sometimes our) car once they’re legally allowed to, and we allow them to head out into all hours of the morning, yet we tell ourselves they’re not mature enough to have input into financial decisions. They’re likely to eventually end up with it anyway, so it’s our responsibility to ensure a sustainable wealth transfer – use your wealth as an enabler, not a dis-abler.

Historically, 70% of inter-generational wealth transfers fail due to lack of communication, so it’s on you to get it right.

4. Structure and planning

Once you’re clear on your values and have written down your goals, it’s time to put in place the structure and strategy to drive your vision – your game plan.

This ensures investment decisions can be made while looking through the right lens, and that your decisions are driven by your vision and by achieving yours goals, not by the Fear of Missing Out (FOMO), tax, or other distractions. Unfortunately, far too many people lead their decision making with the product or investment first, when in fact you should be driven by your goals and plans.

5. Take the long view

Some of the wealthiest families in the world have been riding through the ups and downs of investment markets for decades. Patience and remaining disciplined are important traits in order to be successful. You need to allow time for your strategies to unfold. The corporate and investment world is so focused on the performance and outcomes over the next “quarter” (3 months of the year), you too should focus on the next quarter, the next quarter of a century that is.

Finally, stop focusing on stock picking and get your asset allocation right – it represents and generates 90% of your return, whereas stock selection generates 5%. We spend 90% of our time on the thing that generates 5%, and 5% of our time on the thing that generates 90%.

You can’t know everything about everything. They say that a man who represents himself in court has a fool for a client. Find someone who can provide you with expertise. Someone who can help you make sound, unemotional decisions, someone you can use as a sounding board, someone who can help you see the forest for the trees, someone who can introduce you to and work with other subject matter experts when required. If you do all these things, you too can be an overnight billionaire.

If successful investing and sustainable wealth was easy to attain, everyone would be wealthy.

The Joy of Winning

It’s April 15 1960, episode 28 of the Twilight Zone aired in the US, titled “A Nice Place to Visit”.

We meet a man named Henry Francis “Rocky” Valentine – a shady gambler who is shot by police after robbing a pawn shop. He wakes up to find himself in Heaven where he meets Pip, his angel, who grants Rocky all of his wishes.

Pip takes Rocky to a casino. They take the elevator to the penthouse. Rocky is provided with a wardrobe full of tailor made suits, draws full of luxurious watches, and a suitcase full of cash. Rocky heads downstairs to test his luck as he takes a seat at the blackjack table. He’s dealt blackjack on his first hand – winner! Next hand, blackjack, following hand, blackjack – he can’t believe it! He heads over to the craps table, rolls a winner over and over again. He’s being served alcohol, women are surrounding him, and everyone is cheering him on. He can’t believe his luck, he’s never won so much money in his life.

This continues for the next month. Rocky keeps winning, in fact, he can’t lose. He summons Pip and explains to him that he has become bored with having his desires instantly met. Out of frustration, he tells Pip he’s tired of Heaven and wants to go to “the other place”, to which Pip responds:

“Heaven? Whatever gave you the idea you were in Heaven, Mr. Valentine? This is the other place!”

Horrified, Rocky frantically tries to open the now locked penthouse door as Pip laughs evilly at Rocky’s torture.

What if you could have all the planes, boats, homes, watches, or money your heart desired? How would this make you feel? Would you feel ultimate happiness and joy? Would you feel truly fulfilled? I’m sure you know of millionaires or billionaires who are unhappy, and I’m sure you know of someone who may not be financially wealthy, however they are one of the happiest people you know.

Without spending time to uncover what fulfills you, just like Rocky, you too will realise that money is simply a means to an end, and that you are setting yourself up for failure. Material items do not bring true joy or happiness. If you live for that luxury house, the finest time piece, the overpriced shoes you will probably never wear, or the next piece of technology, you will never have enough, and you will never be truly happy. You’ll be living in a Twilight Zone of your own making.

Tony Robbins sums up what I believe are two of the most important human needs perfectly:

The Need for Growth

If you’re not growing, you’re dying. If a relationship is not growing, if a business is not growing, if you’re not growing, it doesn’t matter how much money you have in the bank, how many friends you have, how many people love you—you’re not going to experience real fulfillment. And the reason we grow, I believe, is so we have something of value to give.

The Needs for Contribution

Corny as it may sound, the secret to living is giving. Life’s not about me; it’s about we. Think about it, what’s the first thing you do when you get good or exciting news? You call somebody you love and share it. Sharing enhances everything you experience.

Life is really about creating meaning. And meaning does not come from what you get, it comes from what you give. Ultimately it’s not what you get that will make you happy long term, but rather who you become and what you contribute will.

Everything we do in life is about how it makes us feel. Whether or not you believe that deep inside you are continuing to grow and push yourself, to do and give more than was comfortable or you even thought possible. The wealthiest person on earth is one who appreciates.

The Art of Discipline

I stopped driving into the CBD for work a little while ago. The traffic, the frustration, the cost of parking, fuel, and ongoing maintenance just didn’t make sense for me anymore. Since then, public transport has been my escape to the wonderful world of reading and listening. I don’t get too much time to do this on my own, with two little kids, and a wife who also runs a business, we have our hands full like most other young families.

The list of people’s work I like to read has grown over time, and with the calibre of work from these folk, it makes it a little harder each time to add a new one to the list.

One of my favourites is Jason Zweig, a personal finance columnist for The Wall Street Journal, editor of Benjamin Graham’s The Intelligent Investor, and author. He’s a great writer and a brilliant thinker.

With all that is going on in markets at the moment, I thought I would share with you his wisdom. Here are Jason’s Statement of Principles, which he does a much better job than I could ever do in helping shape one’s thought process for investing. Enjoy.


Successful investing is about controlling the controllable. You can’t control what the market does, but you can control what you do in response. In the long run, your returns depend less on whether you pick good investments than on whether you are a good investor.

The first step to reaching your financial goals is to make sure you set goals that are reachable. Your expectations must be realistic. The stock market is not going to provide a high return just because you need it to.

The second step is to recognize what you are up against. Despite what all the daily market reports make it sound like, investing is not a game, a sport, a battle, or a war; it is not an endurance contest in a hostile wilderness. Investing is simply the struggle for self-control — the unending effort to keep yourself from becoming your own worst enemy.

The market is not perfectly efficient, but it is mostly efficient most of the time. Attempting to beat the market may often be entertaining, but it is seldom rewarding. There’s nothing wrong with gambling on poor odds, as long as you admit honestly that what you’re doing is gambling and as long as you put only a tiny proportion of your wealth at risk.

The brokers on the floor of the New York Stock Exchange clap and cheer when the closing bell clangs every afternoon because they know that no matter what the market did that day, they will make money — because you tried to. Whenever you buy a stock, someone is selling it; whenever you sell a stock, someone is buying it. Most of the time, the person on the other side of the trade knows more about it than you do.

However, you don’t have to lose just because other people win, and you don’t have to win just because somebody else loses. You win when you stick to your own long-term plan, and you lose only when you let greed or fear goad you into changing that plan.

The right time to buy is whenever you have cash to spare. The right time to sell is when you have an urgent and legitimate need for cash. If you buy because the market has gone up, or sell because it has gone down, you are letting 100 million strangers rule your life with their greed and fear.

Once you lose money by taking too much risk, the only way you can earn it back is by taking still more risk. If you lose 50%, you have to earn 100% just to get back to where you started. And if you lose 95%, you need to earn 1,900% before you break even. You may be able to do that once or twice through sheer luck alone, but the more often you have to try it, the more likely you are to end up broke. All too many people live their investing lives like hamsters on a wheel, running faster and faster and getting absolutely nowhere.

If you want to have more money, save more money. (I don’t 100% agree with this one, because I think if you want to have more money, making more money is also an option).

Investments that outperform in a bull market are certain to underperform in a bear market. There is no such thing as an investment for all seasons. That’s what diversification is for: to protect you against the risk of putting too many eggs in the wrong basket. And buying something that has just doubled, in the belief that it will keep on doubling, is an extremely stupid idea.

Your goals are a function of all your life circumstances: your age, marital status, income, current and future career, housing situation, and how long your children (or parents) will be dependent on you. Risk is a function of probabilities and consequences — not just how likely you are to be right but how badly you will suffer if you turn out to be wrong. Investors tend to be overconfident about the accuracy of their own analysis — and to underestimate how keenly they will kick themselves if that analysis is mistaken. Understanding your own shortcomings as an investor is far more important to your long-term success than analyzing the pros and cons of individual investments.

In the short run, hares have more fun; but in the long run, it’s the tortoises who win the race.

Why Some Succeed & Others Fail

It was 2009, I was sitting at a breakfast at what was the Lexus Centre during the time, and listening to Collingwood FC CEO, Gary Pert, talk about Collingwood’s three year plan. The goal was simple – to win a premiership within the next three years. I guess every team wants to win the premiership, so what makes Gary’s desire more worthy than the 15 other teams? His strategy. Collingwood went on to win the premiership in 2010, and came runner’s up in 2011 after finishing the season with a record 20-2 (wins-losses).

Like Collingwood FC, most investors have goals – whether it’s financial independence, regular travel, helping their children, maintaining a legacy, giving back to their community, or all of the above. Yet most investors don’t have a plan or strategy to achieve their goals.

By failing to plan, you are preparing to fail

– Benjamin Franklin

We’re constantly pushing investors to think strategically. To be clear on their goals, and to design a plan, their game plan. All the market reading and analysis, asset allocation and investment selection decisions are worthless without being able to be put into perspective of an overall plan. When I talk about a planning, I think about it as an ongoing process, not as a one off event.

We generally meet investors who are looking for someone to help them manage their investments. After spending hours getting to know them, their family, their goals, their priorities, their concerns, we generally find that there is a disconnect between what they’re telling us they want, and their investments and their balance sheet. The best investment management in the world won’t be of any use to anyone if it’s not put into context of that person’s life.

In the end, it’s more than investment management these people are looking for. They need help with determining how much risk they can and should take, how sustainable is their retirement income needs, what is the most appropriate mix of investments, and how to protect and transfer their family’s wealth.

They’re looking for a strategy, their looking for guidance, they looking for reassurance that they are on the right track and that they are, and will be okay.

AFL legend and premiership coach Paul Roos, summed it up perfectly when he was asked what he was thinking in the last quarter of the 2006 grand final.

Having a plan and following it is far more important to your success than analysing the pros and cons of individual investments.

So, what’s your game plan?