Pearls from IMPACT – Navigating Uncertainties

There’s a saying that people don’t care how much you know, rather, they’re more interested in how much you care. It’s wonderful to be in a learning space filled with caring people. That’s why I attend an annual advisor conference called IMPACT – a large crowd of about 4,000 and rich with content and conversation. I’ll share two key points.

An Era of Instability and Anxiety – Former PM Tony Blair’s words summarize the reality of today’s world. The speed of information and change creates challenges which themselves are multi-directional, and sometimes simultaneous – they don’t line up neat in a way to pick off one by one. We’re all trying to find workable solutions to complex problems. Captain Mark Kelly, commander of the last Endeavor crew and husband of Gabby Gifford, spoke about planning and goal setting in dangerous situations (e.g. the chances of death on a shuttle launch are similar to pulling the ace of spades from the deck, and why you fly alone on your first carrier jet landing). And about group decision making, he said “None of us is as dumb as all of us.”

Brian, I’m not reading much positive here. Au contraire. We can not stop the force of globalization. Within 20 years, it’s expected that 30% of high net worth individuals will reside beyond the borders of America. China is undergoing rapid urbanization. (There are approximately 16 cities in the US with populations of a 1 million or more, 25 in Europe, and over 160 in China). And perhaps China’s cost advantages shall wane due to rising wages and real estate prices, and lead to a resurgence in US manufacturing.

The point is you’ve got to actively manage your finances in a world of uncertainty – otherwise, I might join you in prayer.

Look Within for The Risks – Challenge the traditional ‘plan for death’ approach – Prepare your estate for your family. Switch it around. Prepare your family for your estate. This involves teaching financial literacy and values. Two interesting studies were presented about risk perception, versus reality. In a study by Family Office Exchange, a question was posed – “What do I think will bite me?” Extraneous risk factors scored high – Investment (37%), economy and financial markets (26%), political and tax (16%) – only 7% of the perceived risk was family communication and relationships.

Another study by Williams and Pressier was “Why do 90% fail?” The results for failure – Lack of communication and trust (60%), unprepared heirs (25%), financial planning/ taxes/ investments (3%).

Talking finances with your family is tough. How much is enough? When do I tell them? Perhaps you estate or financial advisor can help facilitate those dinner table talks.

The spirit of Captain Kelly’s words is to speak out when the herd’s ‘decision’ or direction don’t sit well. And the sister sermon is no one person is as smart as the group – the value of protecting yourself with a team of independent experts. There’s an abundance of resources and tools. Hopefully, you’re not doing it alone.

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