AVOIDING FINANCIAL TURBULENCE

I flew to Phoenix this week to get Launa after an airline left her stranded when she really needed to be home. During pre-flight I told her the flight home would be smooth, but to be prepared for turbulence in the climb. She has flown enough that she doesn’t worry about the bumps, knowing from being married to a pilot that turbulence does not bring down airplanes. Actually, the severe turbulence inside thunderstorms can bring down airplanes, but these angry beasts of nature are pretty easy to see and avoid.
 
The turbulence that is generally harmless, but which causes regular discomfort for passengers, is invisible to both the eye and modern technology. It can be predicted based on other detectable conditions, but such predictions are routinely inaccurate. I have taken off into skies with significant turbulence forecast, only to have a smooth ride the whole way. I have also flown on perfectly calm days and had my headset knocked off by unexpected rough air.  After one such surprise event my young son in the back called out, “Dad, did we just hit a Pterodactyl?” That has since been our expression for a really bumpy ride.
 
If you listened to Air Traffic Control, you would find that a lot of radio time is spent by pilots seeking smoother air. Since you can’t see turbulence, the best way to know where it is, is to listen to reports from other aircraft. Pilots avoid turbulence, not because it is dangerous, but because passengers don’t like it. When I am flying along and the ride gets bumpy, I don’t worry about the turbulence affecting the ultimate outcome of my flight, but I do worry about it making my passengers uncomfortable.
 
In many ways my career as a CFP® is not a lot different from my being a pilot. My job is to get my passengers to their destination, avoiding as much turbulence as possible along the way. One of the ways I try to avoid turbulence is by encouraging a more moderate allocation; The goal of which is to try and smooth out the bumps. Financial planning should not be about getting the highest possible return if in so doing you create so much stress that you can’t enjoy your life. In fact, at a recent women-only seminar that I teach, I asked the group if they would accept a little less return in exchange for less volatility. They unanimously agreed that they would.
 
In flying I take many steps to avoid turbulence such as slowing the plane down, diverting around, or climbing above the rough air. Each of these results in arriving at our destination a few minutes later than planned, but when I explain the reason why to my passengers, I have never had anyone complain. Sometimes it pays to slow down a bit. I have learned that in flying and in investing, taking a more moderate course is often the best option, because hitting a pterodactyl is never a pleasant experience.