So, You Need To Make A Decision…
While not as ubiquitous as belly buttons or opinions, there are certainly plenty of different decision-making styles out there. Whatever your personal style may be, most integrate these five steps into the experience.
Define Your Purpose
Regardless of whether the decision is important or not, you should be clear about your guiding principles. Any decision-making style should be influenced by these principles.
In our financial planning process, the overarching purpose for nearly every client is to live their BEST life. Your BEST life is a series or compilation of tangible dreams. And while a dream is often difficult to quantify, most dreams come attached to DOLLARS, DURATIONS and DEADLINES which are measurable. Collectively then, the attainment of these measurables should result in a life that exemplifies your guiding principles and BEST life.
Decide How to Decide
Everyone is faced with decisions, but not everyone needs help with every decision. For the decision at hand, do you simply want input to help make the decision yourself? Or will the decision be made by consensus, etc? In our firm, some clients are content to give us the reins for all decisions while others enjoy being actively involved in the decision process. Regardless of the personality type of our client, financial planning decisions are best made using a proven process. Of course, context and experience also factor into making a final decision.
Commit to a Process
It should be of no surprise that we place committing to a process as the most crucial component in any decision-making process. Among these five common traits, committing to a process is the one most credited with helping you avoid pitfalls.
Pause and Listen
It is often said that there is QUICK, CHEAP, and GOOD- pick any two. Applying this sage advice to decision making often means that if you want to make a GOOD decision that costs the least amount i.e. is CHEAP, then you give up QUICK. Similarly, a common sales technique is to create urgency and get a buying decision quickly.
Truly sound decision-making involves taking a breath, pausing, and considering all the facets and angles of a decision. For example, a really good decision takes into account how others will be affected by the decision.
Financial planning is 90% listening. This may seem intuitive; after all, we are planning for YOUR life, not mine, but you would be surprised how much Advisors want to talk. Shame shame shame. Active listening is difficult for most and painful for some, but it is a crucial part of making good decisions.
Periodically Reassess
If life were static, you would not need planning and the right decision could be made every time. Piece of cake. But we live in a universe that is in constant change. Life is profoundly dynamic. How did 2020 turn out relative to your dreams and expectations New Year’s eve 2019? Yes, life is indeed full of unknowns around every corner. As a result, there is no rule of thumb per se and every decision must be made in the context of the facts at the time.
As important as an initial financial plan may be, the real value of the planning process is in the constant re-evaluations and re-assessment. I often make the analogy of dpi or dots per inch. The more dpi there is in a picture, the clearer and more defined it becomes. A high-definition picture allows you to see more accurately what you are looking at and are therefore make better decisions. In financial planning, we re-assess our client’s financial security often daily, but no less frequently than every 30 days. This is then enhanced with Quarterly reports and Annual audits.
Follow these five basic decision-making tips and you will limit or even eliminate any regret at the end of your journey. This is the future of Advice. This is planning done right!