"I do nothing but going about persuading you all, old and young alike, not to take thought for your persons or your properties, but and chiefly to care about the greatest improvement of the soul. I tell you that virtue is not given by money, but that from virtue comes money and every other good of of man, public as well as private. This is my teaching, and if this is the doctrine that corrupts the youth, I am a mischievous person." ~ Socrates
Five years ago today I stopped "workin' for the man" and started my own investment advisory firm. I've learned many lessons along the way, none of which I would have predicted. Here are five of those lessons:
1. Plans Are Useless, Planning is Essential: This lesson, with words borrowed from Dwight Eisenhower, speaks to the nature of life itself. Life is constantly evolving; unforeseen obstacles and opportunities will continue to arise. Plans may account for the unforeseen but it is impossible to predict the timing or intensity of unforeseen events. I'm a CFP and an MBA. You'd think I'm as good of a planner one might find (I even received an 'A' in my graduate entrepreneurial business course for my business plan). My business plan did not foresee The Great Recession of 2008 and it did not foresee my creation of The Financial Philosopher. However, with that said, the planning process, whether it is financial or otherwise, often brings to the surface information, thoughts or feelings that may not have been recognized if not for engaging in planning. Create the plan for the purpose of engaging in the planning process but file away the plan and form a new one within a year to 18 months.
2. Wisdom is More Powerful Than Knowledge: As Sir Francis Bacon profoundly stated, "Knowledge is power." However the only knowledge that is truly empowering is self-knowledge. Certainly, knowledge of external things (i.e. money, material and social matters) can aid in acquiring external wealth but the lack of self-knowledge has the potential to destroy the self along with the acquired external wealth. For example, throughout the credit crisis and ensuing recession, I've witnessed clever but criminal behavior (i.e. Bernie Madoff) destroy financial wealth and the lives of many people--all because of knowledge in the absence of wisdom. In my personal and professional life, I've minimized the pursuit of external knowledge (I stopped my subscription to all magazines and newspapers and I no longer use financial planning software) and noticed my judgment has become much more clear, confident and prudent.
3. True Wealth is Not Measured by Financial Means: From the beginning of this five-year journey, I set out to follow the wise advice of my then 4-year old son: "I'd rather have my Daddy than money." Think about all you wish to accomplish with money: Do any of these accomplishments align with your highest priorities? You may find that your financial pursuits, no matter how good your intentions, are eroding at your most valuable possessions. What is more important than your health, personal relationships and connection with the present moment?
4. Happiness is Found Easier When Not Looking For It: Happiness, by its own definition, is not something that can be created or manufactured--it "happens." By virtue of finding contentment with all that you have now enables happiness to happen because you have effectively reduced the perceived benchmark for happiness to the present moment. In different words, if you already have enough, all that you acquire from this moment is more, which brings higher levels of satisfaction. It is not wrong to desire more; this is your nature. However, it is unhealthy to desire more in absence of contentment.
5. The Fear of Death Does Not Come From a Love of Life: The combination of reading philosophy and losing people and animals I love (along with passing my own 40-year mark) has provoked a profound reflection on life. If one is to begin with the end in mind, the true end is not some destination reached in a financial plan, a career path or some other end. All ends in life are subordinate to the end of life; the plans we make—financial, career, and personal relationships—may be given meaning and purpose by holding close the thought of mortality: Death gives meaning to life—your life—and it enables the perspective that will allow you to form your own philosophy—your life philosophy—the meaning and purpose of your life and all that you do. To embrace death is to embrace life and all that it contains.
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I've been subscribed to your blog for a while and never thought to comment. Very excellent points. I mostly agree that wisdom is more powerful than knowledge and also agree that not everyone is born with wisdom.
Without wisdom, one does not have morals. Without morals, one does not know what are the right moral decisions that don't harm anyone, directly or indirectly. - Me
I'm glad that you've gotten rid of external stimulation and focused on internal stimulation. Specifically internal love which is a very powerful energy for continuous growth.
Enjoy your day.
Posted by: Andrew | September 15, 2011 at 02:25 PM
Andrew:
I appreciate your comment, especially after being a reader for a while. I agree with you: Wisdom can be considered the culmination of all virtue (contentment, simplicity, frugality, humility and so on).
Perhaps we may extend upon Sir Francis Bacon's idea that "knowledge is power." The power is obtained because the acquisition of knowledge can be accompanied by the realization that there is much that we don't know. In other words, the more knowledge we acquire, the wiser we become.
However, many people do not find this humility; they simply fool themselves into believing that their external knowledge is what provides the power.
Thanks again for sharing your thoughts and for being a reader.
Cheers...
Kent
Posted by: Kent @ The Financial Philosopher | September 15, 2011 at 02:42 PM
Thanks for sharing these lessons, Kent!
First, the problem with 10 year plans, if executed to perfection, is that you get what you wanted to 10 years ago. One of the things I'm most thankful for in my life is that my plans from my younger years didn't work out exactly as I planned.
Second, I feel ambivalent towards #2. I think knowledge and wisdom can coexist and can be of equal value. I've tried to shut off the outside world before too, but it didn't seem very wise, it felt selfish. Kent, you are a guy that is capable of making a positive impact on this world and with all due respect, I find it saddening to hear that you want nothing to do with what's going on in the external world around you. I think part of wisdom is being able to doubt your own knowledge; it's also part of what makes you a philosopher, but there are also things I think are worth fighting for. If you choose not to participate and engage in the outside world it ultimately makes the world a poorer place.
Cheers,
Greg
Posted by: Greg Linster | September 15, 2011 at 09:44 PM
Greg:
Thanks for the thoughtful comment. I agree with you on the value of participating in the external world. I have not removed myself from the external world but "minimized," or a better word would have been "reduced," exposure to external information, such as The Wall Street Journal and various trade magazines. In other words, I have greatly reduced "news" coming from sources that exist to sell advertising. I still watch the evening news from time to time and (as you know) I read a handful of blogs to expand my external knowledge. Most of my consumption is books.
Engaging the external world does not require consuming large amounts of external information.
Henry David Thoreau, for example, created his best work after stepping back from society.
I simply consume much less external information than the average person. I'm still engaged with the outer world but more of a producer than a consumer.
Thanks as always for keeping my blade sharp...
Kent
Posted by: Kent @ The Financial Philosopher | September 15, 2011 at 10:46 PM
Kent:
Thanks for the thoughtful reply. I think I understand what you were saying much better after your clarification. Battling 'the noise' is a difficult challenge for all of us, but shutting off the outside world isn't the answer either (and I now realize this isn't what you were suggesting. You were, I think, merely suggesting that we use more effective sources with a better signal to noise ratio, which I highly agree with!)
You are certainly correct to suggest that, in capitalist society, much of what passes for journalism is merely a tool used to sell advertising. That is unfortunate, but that is why we need people like you to keep writing!
I'm right there with you on reading books. As you know, like you, I'm a bibliophile myself. I really like this aphorism that Professor Taleb wrote in his latest book, "The book is the only medium left that hasn’t been corrupted by the profane: everything else on your eyelids manipulates you with an ad."
Posted by: Greg Linster | September 16, 2011 at 04:29 PM
Kent,
I got caught on your 'workin for the man' comment, and not in a bad way, but in a good way. It really caused me to ruminate deeply. Although, not everyone can go off and start their own business, it is true that most employees are busily working at achieving SOMEONE else's dreams; the owner of the company, a spouse, a parent, etc. We must all summon that inner courage, no matter how uncomfortable at first, to live a truly authenic life, and not someone else's.
Posted by: DJ | September 16, 2011 at 07:16 PM
DJ:
You make great points. Not everyone can start their own business but it is possible to enjoy what you do and work for yourself, even if you are employed by someone else.
For example, I did enjoy most of the work I did in my previous job "workin' for the man" and I still had the perspective that I was working for myself and my family even though it was on someone else's terms.
I know for a fact that my previous boss used me as a tool for his own advantage but I was also using him as a tool for my own. At the same time, I treated the clients I served as my clients--not clients of the firm. It paid off because many of those same clients followed me when I started my own business.
Thanks for adding to the conversation...
Kent
Posted by: Kent @ The Financial Philosopher | September 17, 2011 at 09:23 AM
I agree with minimizing the outside noise as it will serve you and your clients well. You will both benefit because you will focus on the big picture over the long term, and not be influenced by the short term noise that the financial world craves.
Posted by: kk | September 21, 2011 at 11:48 AM
I am thankful for exerting your time and effort to post this very informative post. keep up the good work!
Posted by: Print Mis | September 23, 2011 at 03:59 AM
Your five points are Universal. They work for the pauper as well as the prince. However sometimes something you know in your heart doesn't click for you until you heard it said by a certain person a certain way. Great Post. I, like most people need a little reminder of the important things once in a while.
Posted by: Dan Fielding | October 03, 2011 at 02:59 PM