Last weekend I was ‘lucky’ enough to go hiking with my daughter, for her 21st birthday present. We stayed in a little cabin in the lake district, which was described as glamping. It was fantastically located both right next door to a very decent pub/café, and literally at the bottom of a footpath up towards Scafell Pike.
If you’re in the part of the world that I’m typing this in (a little south of Cambridge, nicely East Anglian), your experience of the weather last weekend was around 30 °C, and blazing sunshine. That wasn’t our experience. Saturday in the lakes was a reminder of why the lake district is so named. 12 hours of drizzle, a bit of wind, and spending the entire day wrapped in a cloud. Up on the hill, where the defining characteristics are peat, grass, and water, it can quickly become a little…. disorienting.
Freya and I are reasonably experienced walkers, so a bit of bad weather isn’t a problem. But even experienced walkers can quickly become lost if they don’t know where they are, and if (as in this case) the paths are perhaps not so well defined. Our path was most definitely not well defined. In fact, it petered in and out of existence in what would normally be a whimsical way and in bad weather, with poor visibility, that can quickly become an issue.
So far, you’re probably wondering why I’m admitting to being a bit of a rubbish hiker, and possibly whether I ended up being rescued or some such embarrassment – but we had an ace up our sleeve that kept us safe, if not warm nor dry.
Having bumbled around mountains and hills in the UK using paper maps that disintegrated in the rain when you got them out of your rucksack, then later fumbling around trying to get beyond the fold using a map case, I know the benefits and limitations of technology.
The early days of mapping on a phone app introduced GPS, and never again would I be lost (unless I kill my phone, which is how I learned about IP water protection ratings).
But now, my phone is waterproof (or at least highly resistant), the app downloads maps, so losing signal isn’t an issue, and I won’t say you can’t get lost, but with GPS telling me EXACTLY where I am, it’s hard.
So, what has this got to do with financial planning?
There’s a saying you may be familiar with… ‘The map is not the terrain’. It’s intended to signify the idea that no matter how good your model of something might be – the actual thing in real life will be more complex and vary or change from the model.
Within financial planning we are very aware of this; clients, as you might imagine, have an amazing habit of having lives that don’t follow the plan we so carefully put together for them. Jobs, health, relationships, and most especially investment performance, does not follow the assumptions we make. But – much like my app driven navigation – having a plan means you can get back on track. As you can see from the graphic attached – the amount of time Freya and I spent ON the path was not as you might expect – overwhelmingly we oscillated from one side to the other or even diverted completely at times.
But having a plan – a map – and having a process of checking in meant we got where we wanted to get and never felt ‘lost’. The combination of technology, and the ability to use it meant we always knew (roughly) where we were, and where we were heading, even if, as is so often the case, we didn’t quite know whether the next step would be path, or bog. My boots will take a while to dry, because there was a fair bit of bog.
For financial planning, the ‘map’ is a combination of your cashflow forecast, and some investment projections. They will never be ‘right’ but provide enough guidance and constructive feedback to give you the ability to stay on track, and that’s what we need to have the knowledge that we’re on the right path. Or nearby anyway.
