“Have a financial plan, but realize the most important part of that plan is planning on the plan not going as planned.”
I found this nugget of wisdom recently shared by Morgan Housel to be all too applicable to a current situation in my life. Let me begin by confirming Morgan is on the money with this assertion, as well as his others in the same post. I’ll also have you know my current situation doesn’t have anything to do with investing or finance, but that doesn’t make it any less applicable.
Last week I began remodeling my bathroom. Knowing little about home improvement projects (this is my first home), I figured I could start working on Wednesday and hopefully wrap up Friday or Saturday. As I write this on the following Wednesday evening, I am finally inching closer to being finished. I’m going to go ahead and blame naivety for assuming I could finish a project with so many variables in such a short period of time. However, that hasn’t made it any less frustrating. If I had known ahead of time it wouldn’t be a quick fix, maybe I’d be a little less frustrated.
First, taking up the floor tiles proved to be a much more arduous task than anticipated. Then we found out the subfloor needed some work. Next we went to lay the new tiling down, except an entire package of tiles was cracked. Once we finally did all that we ran into some issues getting the vanity connected to the water lines, only to find out that we had cut the new moldings to the wrong size. All of the obstacles we encountered reminded me of one of my favorite images:
The more I thought about it, the more I realized that my current situation is very much like that of any investor who works with an advisor. I believe expectation setting is a huge deal when it comes to interactions with clients, and mostly because very few people go into investing knowing just how many variables can affect their outcome. I now realize my estimations regarding the bathroom project were wildly inaccurate, and I’m guessing somebody with a little more expertise could have given me the heads up.
Investment advisors are supposed to be that knowledgable person who uncovers the truth for investors looking for a hand. Advisors help investors come up with sound financial plans, however as Morgan Housel put it the most important part of that plan is planning on it not going as planned. That doesn’t mean we shouldn’t construct a plan. I believe everybody should have a plan, but we need to think of our financial plans in the proper way. Things will not turn out exactly as we initially anticipate. There will be minor inaccuracies along the way, but having something to guide your path is invaluable. Anybody can tell you the best plans are ones that adapt to your situation as it inevitably changes.
I always find it funny how much crossover there can be between every day life and investing if you keep your eyes open. Who knew a bathroom project would reinforce something I knew to be true of financial planning?