The All Blacks winning the Rugby World Cup was no accident and cannot be attributed to luck. It was a calculated and regularly reviewed plan that led to the fantastic win. If more New Zealanders applied the same principles to their finances as the All Blacks’ management and coaches applied to the team, then families would be in much better financial shape at retirement age than what many are today. Key lessons we can all take from the All Black win and apply to our financial situation include:
- Build a team of quality advisers around you: The All Blacks selected quality doctors, coaches, managers, and all manner of additional support people to help build a plan and keep the players on track. All of these people are coordinated via the head coach. In the financial world, your Milestone financial adviser acts as the head coach and ensures you have access to other quality professionals such as lawyers, accountants, and mortgage brokers. All work together to ensure you have the best chance possible of achieving your goals.
- Good things take time: The All Black win started as a plan four years ago and was regularly reviewed and refined as the World Cup approached. In finance, you need a financial plan that identifies where you want to be and in what timeframe. Markets move, new products are produced, and your circumstances change: a minimum of an annual financial review is essential to keep you on track with your constantly evolving goals.
- Plans are written down: The All Blacks did not suddenly develop a game plan on the day. They actually had a written plan that harnessed the strengths of the team and was adapted to deal with the opposing team at the time. All members of the team knew the plan, their performance could be measured against it and the right combination of talented players could be recruited to meet the needs of the team for respective games. A financial plan or statement of advice is similar. It sets out the right mix of investments to meet an investor’s goals and timeframes. The investments are regularly assessed using independent research to ensure they are fit for purpose. If markets move, then the flexibility built into the financial plan enables clients to take advantage of the situation.
- Discipline is crucial: We have all seen sports teams lose the match due to a loss of discipline the moment pressure came on them. The All Blacks were steadfast in their adherence to the plan. MacCaw and Hansen instilled strong discipline so the team could remain focussed no matter what was thrown at them - both on and off field. Staying true to a financial plan is just the same. It is tempting to sell out when the doomsayers are predicting a big fall in portfolio values, or to stop making regular contributions to your savings when markets are weak. However, time has shown us that continuing to remain invested and continuing to make regular contributions to your savings schemes wins the day.
- All that glitters is not gold: There is no denying that the All Blacks is a team of highly talented players. However, Hansen selected the team based on how they can combine their skills to build a collectively more powerful entity rather than because each is a superstar in their own right. Building an investment portfolio is a bit the same. We do not just select the highest performing investments and hope they will collectively outperform everything else. Additionally, we don’t take big bets by adding to the portfolio the latest fad or star investment. Instead, we select all high quality investments but combine them in a way that will increase the overall investment performance without taking an exponentially higher investment risk. At the end of the day, it is the risk-adjusted return rather than the total return that really counts.
A Milestone financial adviser follows similar principles to that of the All Blacks’ coach. Instead of winning a game against another rugby team, they are helping clients win a battle against the rising cost of living and the spending temptations of advertising, so clients have enough money to achieve their stated goals at the time they want to achieve them.
Talk to us about why a financial plan could be one of the best investments you may ever make.