Most if not all of us have heard if not prayed the Serenity Prayer. Just as a quick reminder it goes:
God, grant me the serenity to accept the things I cannot change,
courage to change the things I can,
and wisdom to know the difference.
Conceptually it is such a simple concept but, it is so very difficult to implement. On a daily basis I wish I had that wisdom to know the difference.
As an LPL Financial Planner and retirement coach, I am consistently discussing this concept with our clients. Many people (financial professionals included) will spend the majority of their time discussing which specific investments they should own. Deciding which stocks, bonds, etc. that they should own. Discussing historical returns as if they will predict the future. These discussions lead to frustration, disappointment and agony because the future investment returns will be different from the past. The more the future varies from the past the more your confidence will be called into question.
Instead of spending the time discussing the things you cannot change, I suggest that we spend the time on the things you can. You can not control the investment returns, you can control what risks you are willing to take. There are many areas of finance that you directly control such as:
- How you use your income and assets to improve your life.
- Deciding when to invest and for how long.
- The flexibility of your spending plan.
- Pre-planning how you will react when different markets impact your plan.
- Controlling the behavior towards your money and finances rather than the other way around.
By approaching financial planning and coaching in this manner we want our clients to address the issues they can, plan their actions and feel confident because they are not wasting their time on issues that are beyond their control.
Don’t get me wrong, there will always be times when the market will be down. When those times hit you will be screaming in the words of Frank Costanza, “Serenity Now!!!”. But because these things are known and expected, we will have already worked our way through the fire drill and know should be done (or not done) at that time. In essence we will have worked through and have accepted the things you cannot change, courage to change the things you should and have the wisdom to know the difference.