LOOK AT IT THIS WAY
Do you remember what life was like before the global positioning system? This satellite-based radio navigation system, originally developed by the US Department of Defence in the 1970s, underpins a myriad of consumer applications today.
Driving around an unfamiliar city without directions used to require buying a book of roadmaps which were inevitably out of date and indecipherable. If you were on your own you would have to pull over to the side of the road periodically and squint at the map. Relationships would come to grief with one partner navigating trying to read a book perched on their knee in bad light.
Now with mobile phone apps like Google Maps or Waze you can find your way easily around just about any city, with a friendly voice guiding your way. Some apps will anticipate road blockages and traffic jams and suggest alternative routes to get you to your destination on time.
Having a good financial adviser, employing an evidence-based approach, is like having an inbuilt navigation system for your investments. Instead of relying on a dog-eared, second-hand guide that takes no account of your goals or circumstances, the right adviser can guide you safely to where you want to go — being mindful of the potholes along the way.
Like a navigation app, the adviser can see the bigger picture. Even better, he knows what your situation is — what kind of car (portfolio) you’re driving and how much gas you’ve got in the tank. There may be a quicker way of getting to your destination, but it may be the riskier route and your adviser will judge what you’re capable of handling.
Having this human app alongside you gives you the peace of mind that you’ll get to where you want to go. Of course, there’ll be unanticipated events along the way — like bad weather (market volatility) and road closures (illiquidity) — but a diversity of routes means you have choices.
Safety, security, direction, structure and good execution make the right adviser an essential tool for any investor – a GPS for your financial life.
Look At It This Way is a series of monthly articles where we demystify the complexities of investing through illustrative metaphors. Take a look at the previous entries:
Saving money with the cappuccino strategy
From little things, big things grow
Shift your focus away from passing showers
What is the “all-roads vehicle” of investing?