Brittany Wrightson- Marketing and Administration Assistant
Sovereign Wealth Partners
As the athletes head home, stadiums are cleared and locals reclaim their spot on the sand at Broadbeach, we reflect on what it takes to be a successful athlete and how these are manifested in the financial world (and no, it doesn’t involve wearing lycra).
What an exciting last few weeks at the Gold Coast 2018 Commonwealth Games! Filled with many record-breaking, heart-stopping, edge-of-your-seat moments, it was nothing short of thrilling. Watching athletes perform at the top of their game, demonstrating exceptional talent, endurance and resilience, we have summarised the skills and characteristics we believe define a world-class athlete and how these are also applicable to finance and investing.
Have a Game Plan
Successful athletes always have a Game Plan. Whether for a training session or competition, they will have a list of objectives or desired outcomes to motivate and drive their performance. Having a strong Game Plan not only provides direction but enables expected performance to be compared against actual performance in order to identify areas for further improvement.
A good game plan will be flexible enough to allow adjustments to be made when necessary in order to respond appropriately to changes in the external environment. The same can be applied to investing – constructing a strong Game Plan reflective of your financial goals and objectives is imperative for sustainable performance. Not only is it beneficial for providing motivation when things are going well, it also provides direction and strategies in times where markets may be extremely volatile.
Successful athletes listen to their coach
Coaches are an important component to any team or individual’s success. They are able to provide support and encouragement as well as a unique set of skills and expertise. Coaches have a unique perspective, often able to see things that the athletes may miss which can sometimes mean the difference between a positive or negative outcome. They provide advice, feedback and direction and ensure the accountability of athletes for their individual and collective performances. They enforce the Game Plan and using their knowledge, skills and experience are able to make adjustments to ensure the athlete reaches maximum performance.
There are endless stories throughout the history of sport where athletes have believed they could go it alone and achieve the same, if not better results without the assistance of a coach. Many people have the same attitude towards seeking financial advice, thinking they are doing well enough managing their wealth themselves. Whilst you may be making sound returns on your investments or are simply satisfied with your performance to date, are you limiting your wealth’s potential? Many people mistake the avoidance of significant losses as ‘doing well’, however this doesn’t take into consideration the opportunities you may be unaware of that could significantly improve your wealth portfolio. Opportunities that a financial adviser could help you unlock. Even a 1% increase in your portfolio value with the assistance of an adviser is still 1% more than you’re making trying to do it on your own.
It’s relatively easy to experience positive returns when the markets are strong, but what if we were to experience another GFC? Do you have a strategy? Are you confident in your skills, knowledge and expertise to appropriately navigate you through extremely turbulent market conditions? Most people don’t.
Winning is not the result of a single action, but a culmination of smart moves
Successful athletes don’t win games, races or competitions as a result of one singular action. Exceptional performance is derived from a culmination of smart moves which all contribute to the final outcome. The same can be said for financial investing – sure, many people can achieve high returns in a short amount of time, but those who achieve sustainable, long term growth have done so as a result of several informed decisions which collectively, have resulted in desirable outcomes.
There’s no such thing as a sure thing
There were numerous athletes and teams who started the Commonwealth Games as the favourite to win, built on strong past performances and hyped up by audiences and the media. However, as the Games showed, many fell short of expectations. Whether as a result of injury, shock losses, being outplayed by the opposition or underestimating other competitors there were many who left disappointed. This same behaviour can be displayed in financial markets – whilst an investment is unlikely to tear a hamstring, they certainly can underperform or not meet expectations. Whilst some holdings may have displayed strong performances in the past, this can not always be used as an accurate predictor for future performance.
Resilience differentiates success from failure
However, regardless of their actual versus expected outcome, one characteristic that is common amongst successful athletes is resilience. Despite previous failures or mistakes, successful athletes are able to learn from their past experiences and utilise these lessons to channel their energy into improving and delivering strong performances in the future. This attitude is also shared amongst good investors. The ability to learn from previous errors or unexpected outcomes and approach future decision making with informed decision making and a realistic attitude.
Successful athletes put in the work
Just like athletes don’t achieve the results without putting in the hours of training, you can’t expect to achieve returns you want if you don’t do the work. Constructing a portfolio that reflects your needs and desired performance outcomes won’t happen overnight without taking the time to define your goals and select investment options that are most appropriate to you. This is where a financial adviser (such as Sovereign Wealth Partners) can be beneficial. We work with you to ensure that you can achieve your goals in the most sustainable and efficient way possible.
You’re never too old
Many people think they’re too old to change their investing habits or to action a new game plan but if Ken Hanson’s gold medal win demonstrates anything, it’s that age is just a number. Hanson became Australia’s oldest ever gold medal winner at a Commonwealth Games, after making his debut at the age of 68. You don’t have to give up on your dreams of selling the house and cruising around the world or buying that car you’ve had your eye on for years. Many people give up on their financial goals simply because they’re unsure as to how to achieve them. Implementing goals and strategies with the guidance of a financial adviser can ensure you achieve your goals regardless of your age, and possibly even help you realise new goals you previously hadn’t thought possible.
If you’d like to learn more about how to become your own financial champion, feel free to contact us.