Big Picture Planning

Most of us have learned over the years that "God/the devil (depending upon where you heard it or your orientation to life) is in the details." It's certainly true in medicine and it is true in money matters as well.

If you take care of the small things, the big things tend to take care of themselves. But, for some of us, if you become focused upon details to the exclusion of awareness of the overall picture, you may end up missing the point. After all, shouldn't the small things work in service to bigger goals?

I once saw a team in a teaching hospital focused on getting to the bottom of a very sick patient's anemia. I pointed out that six vials of blood per day for weeks amounted to a modern version of bleeding the patient and the wayward focus on his (iatrogenic) anemia was actually hampering his recovery.

And how many doctors do you know who are almost obsessed about the tax consequences of some investment when what matters is the big picture: is this a money-making enterprise before taxes?

Our financial lives have many parts that we have to learn about, tend to and then, hopefully, integrate. Budgeting, saving, tax planning, retirement planning, college planning, insurance, investments and legal structure (contracts, will, trusts, etc). Think of our financial lives as needing a holistic understanding, the whole gestalt, if you will.

This is part of what a financial advisor can do. Provide an objective overview with knowledgeable information about each part and how to integrate them. But even if you do have a savvy and trusted advisor, each of us still benefits greatly by having some basic understanding of these subjects.

And what do I keep harping upon in this series? All together now, class: "doctors do not get any training on this stuff and our lack of perspective and knowledge on financial and organizational affairs negatively impacts our practices as well as our personal lives." I always feel better after I say that.

So we need to create a rational plan and only then execute the details. All this while both keeping up with changing circumstances in our lives and the marketplace and yet not losing sense of the big picture. The overall point of it all is to meet our economic goals to help us meet our overall life's goals. We shouldn't forget that while we live in a capitalistic, consumer-oriented society, which is all well and good, our focus on the financial side should not mislead us that that is all that there is to our lives. Remember Peggy Lee's song "Is That All There Is?"

But the purview of PMD is to help doctors with the financial side, so back to work. It's very easy to get caught up in the financial headlines of the day and lose the long view. That's one reason why when people ask what they should invest in during this volatile economic period, I always point them back to the importance of how they invest, not in what. Many studies have shown us that for a group of people, the balance and distribution of investments play a far bigger role than each specific holding.

That is with a nod back to my last column where I wryly pointed out that it is always better to be lucky than smart. But most of us are not particularly lucky as a rule, so we are reduced to relying upon knowledge and planning to get ahead.

I had the occasion last week to talk to a CEO of a Silicon Valley company who complained that a series of high-profile investment adviser firms had cost him a lot of money in recent years. In fact, his best investment was to keep a big stash of cash returning him a tiny 0.5% per year. But that's even less than our low inflation rate, so he is still a loser. In this era cash alone may be comforting but only in service to a strategic plan. A point that my CEO friend seems to have missed.

But he is a creature of the Valley, where there is an undercurrent of the Big Hit in the back of everyone's mind. He and his confreres are a very competitive bunch, keeping score with money. He's not quite ready to stop and smell the roses, so it's a good thing that he continues to earn a big salary to fritter away.

Who knows, you might get a piece of the "better lucky than smart" action, but don't bet the kids' education on it. I know that "man plans and God laughs," but what else are you going to do?

Come to think of it, he reminds me of a number of doctors' experiences and attitudes, albeit at an order of magnitude with less money. Yes, planning and discipline to enact it can be boring and at times testing, so if you must get away from the Big Picture, take some "play money," maybe 1% of your investable capital some experts say, and delve into gold, commodities, puts and calls, foreign currencies and other high-risk "fun" ventures.