Longer Lasting Fruit: 72 Day Marriage and Eurozone Crisis

1994: Dumb & Dumber - Farrelly

It seems that few things last... now the financial agreement made just a few days ago is being jeopardised as the Greeks consider the full implications. This has had immediate impacts on the global markets, coupled with the collapse of financial firm MF Global. So we seem to be on the merry-go-round again as the frenzy of short-term thinking leads us a dance to nowhere, just like another week on Strictly Come Dancing, where glitter and gloss may help, but won't in the end, make up for a lack of ability.

It is tempting to get sucked into short-term thinking and seems like a significant discipline to keep to the course, with a plan that is based upon values. This is what any good financial planner should be helping clients achieve - a sense of direction and purpose for a unique financial plan. Certainly it needs to be reviewed, but not constantly changed - which merely indicates that there was never really a plan of value in the first place. My job is to help clients to make fewer mistakes - financial ones. It is time to be reminded of the basic principles of any good financial plan. Here they are - they apply to indiviuduals, businesses, charities and Governments (and those in the media).... ready...

1.Spend less than you earn

2.Have a realistic, measurable plan about what you want to achieve and when

3.Avoid the use of credit wherever possible

4.Build liquidity (reserves that you can use)

5.Take a long-term perspective and work towards achieving your goals

6.Review, review, review

I didn't say it was rocket science, or particularly genius. The key is to understand your values and build a plan that has them at its core. To chop and change merely demonstrates that this has not been properly done in the first place. So - job number one for an adviser/planner is to help you to articulate your values... the application of the plan requires discipline to avoid making unnecessary mistakes, where you gain the benefit of not simply learning from your own, but also those of others. The financial markets do not need to be a place of self-discovery, the cost is far too great. So don't be swayed by the current media noise, for that is largely all it is - unless of course you want to follow in the footsteps of those that are determined to make countless needless and costly mistakes. We make enough each day without making unnecessary ones too.

Many financial advisers fail to hold firm to the right principles. It is almost certain that today's "top performing funds" will be the top selling funds over the next 6 months - which merely demonstrates the lack of thinking being applied. This is no more "financial planning" than a TV wedding is an enduring relationship, where only yesterday yet another "celebrity" (Kim Kardashian) applied for divorce - just 72 days into the "marriage". I think I've had longer lasting fruit!

I won't labour the point, but in a culture that has such short-term thinking one has to wonder about the likely success of the Junior ISA, which launches today. Good financial planning will bear better fruit, and remember that the best wine is made from grapes that have seen more than one season.

DT