“It’s not just words. Action expresses priorities.” – Mahatma Gandhi
Most prospective clients do not come to Providend with all their money in cash.
Instead, they usually come to us with a mixed bag of investments they have bought (or were sold) in the past.
It is through our planning engagement that we help them assess whether what they have makes sense in relation to the pursuit of the non-negotiable life goals that we draw out from them during the discovery process. And it is almost always the case that significant adjustments to their portfolio are needed.
However, reallocating one’s assets can be a difficult process. Why?
Quite often, it seems like one of the greatest challenges is not in determining the right or new asset allocation, finding the right instruments to use, or even managing the administrative steps required to put everything in place. Rather, for many, the greatest challenge lies in overcoming the struggle against ourselves, and our own psychological barriers.
Even with the knowledge that Providend advisers do not take commissions, even when we have been convinced by a sound, evidence-based investment philosophy, and when a comprehensive wealth plan that maps towards our non-negotiable life goals has been created and trust has been built, taking action can be really hard.
If our current investments are doing well, we might feel there is no need to adjust our allocation because everything seems to be working already. And if the investments have not performed well, there is always the inclination to keep holding onto a losing portfolio in the hope that it will make a comeback someday soon.
With so much inertia against making the changes we need to progress towards our goals, how can we execute our wealth plans with conviction?
Quieting Our Emotional Objections with One Powerful Realisation
We could talk all day about the fear of missing out (FOMO), which leads us to make concentrated bets on trendy things, or the sunk cost fallacy, which makes us feel it is a waste to let go of losing positions since we have already held onto them for so long.
We could discuss how concentrated positions are risky, how hard it is, mathematically, to overcome losses and re-enter positive territory, or whether they are the best way to capture broader upside in the markets.
We could emphasise the opportunity costs that come with sticking to a portfolio ill-equipped for our circumstances and particular goals, or how the evidence points to trusting in efficient financial markets rather than trying to outsmart them.
And still, it may not take us from indecision to conviction.
What I do think helps, however, is to internalise a Philosophy of Sufficiency such as the one that we follow here at Providend.
And by that, I do not mean we should arrive at a passive resignation to our current situation, but instead find the courage to make the conscious decision to enjoy, appreciate, and accept what we have (and that which is already within reach), give up the craving for things that we do not need, and reject the temptation to keep chasing them.
If we can do so, we will come to accept that we cannot have everything and see the foolishness in giving up the opportunity we might have to secure our goals today in favour of clinging on to the chance of gaining just that little bit more (that we do not even need).
We will realise that after we have carefully laid out what is most important to us—our non-negotiable life goals—created a compelling vision for what we want the future to look like, and made a plan that prioritises achieving those things with a high degree of certainty when executed today, we have no reason not to go ahead and do it wholeheartedly.
We need to change our perception that abandoning our previous baggage is chickening out in some way, and see it instead as taking brave, bold steps towards a new world of possibilities.
And if we still do not feel inspired to act, then we ought to question whether the goals we have chosen are even the right goals in the first place.
Why would we compromise at all on giving ourselves the best chance of achieving the things we consider most important in our lives?
This is an original article written by Bryan Chan, Senior Solutions Specialist at Providend, the first fee-only wealth advisory firm in Southeast Asia and a leading wealth advisory firm in Asia.
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2. Relationships, Trust & Emotional Investment Accounts
3. Portfolio Returns 101: 2 Essential Building Blocks and 5 Key Considerations
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