Financial Planning in Perth, Western Australia. Why should it be any different to that which is delivered anywhere else? Well, actually… it’s not. Financial planning is financial planning, is financial planning – and that means it is inherently biased.

Maybe the title should be “WHY is all financial planning advice biased?”

All financial advice is biased because the future is an unwritten book. Nobody can guarantee your financial future because no-one can guarantee the future. At any given time there are a limitless possible courses of action – some of which are MORE LIKELY than others to result in better outcomes.

And it is here that the current financial “world order” comes unstuck. For one reason or another, the mantra of a financial cult has grown to become accepted wisdom. That cult is the Order of Very Clever People and their mantra is that the future is obvious and predictable.

Now let’s get one thing very clear. Even if you subscribe to the idea that we humans have no free will and live in a preordained world, there is no “next step” that suggests the future is any more visible to we mortals than it has been in the past. The Order of Very Clever People is pulling a swifty.

The Order of Very Clever People

The mantra of the Order of Very Clever People goes something like this…

The Global Financial Crisis (a.k.a. “GFC”) was obvious and it is amazing that professional fund managers did not spot it. The crisis continues and the next one is just around the corner. You need to protect yourself by making sure that you have the right information to enable you to make the right decisions. If you do this, you will avoid the big losers and guarantee that your money will be in the right place to pick the winners. All you have to do is have access to the right information. Oh, and by the way… the best way to guarantee your future and ensure that you do better than the rest of the poor, misguided planet is to read my book or go to my website www.VeryCleverPeopleWhoKnowTheFutureAsIfTheyWroteIt.com*

The Global Financial Crisis Rewrote The Rule Book

Here’s an insider’s view of what occured during some of the worst days of the Global Financial Crisis…

As you see, we have just seen the fabric of the global financial system brought to the brink of melt-down (a.k.a. late 2008 and the Lehman Brothers bankruptcy and resultant stampede to cash) and the evaporation of something like $15 trillion of wealth in a matter of months. The ensuing years have seen the unfolding of a global credit crisis, as the loss of wealth reduced money available to keep asset values stable and the flow of funds to refinance existing debts – debts which had been based on assets that either no longer exist or are at much lower prices.

This will arguably result in inflation, stagflation, hyper-inflation, deflation, disaster and boom times. It’s just that no-one really knows which part of the world will encounter which version, when. Very Clever People will tell you that they know this – but i for one, am a doubting cynic… Maybe that is my bias?

How can i justify my “all financial planning is biased” statement?

Well… that’s a much longer answer, and one that we are tackling in bite-sized chunks. All i can comfortably say without a great deal of disclaimers, ‘ifs’ and ‘buts’, is that those who claim loudest to be without bias are the most likely to be living in glass houses.

I will provide links in a later post to help illustrate some of my key points on bias. This includes a notation of which very large institutions own which financial planning groups. The system is far more linked than you may think, and most of the changes to legislation proposed at the moment will do very little to change this.

The aim of this little rant is simply my pointing out the obvious – and expressing amazement that the obvious appears to be not-so-obvious at the moment. The future is not a known book. If it were then financial planning would simply be a matter of looking up the answer. That simply does not work – and has NOT worked in a multitude of ways in the years since the GFC really hit its straps. This means that any attempt to navigate the future must, by definition, be a malleable and flexible effort or it is doomed to fail.

Financial Planning Award

In the meanwhile, it’s time that we recognise the efforts of all those folk who so confidently tell us that the future will look like this or like that but definitely not like something else.