I had a long, pleasant conversation with a guy called Tom, a commercial airline pilot, at a recent party. After sharing some amusing stories about his hair-raising experiences, we discussed finances. Tom admitted he should be doing more to prepare for the future but found it confusing and didn't know where to start.

"Relax," I told him. "It's more straightforward than you think. You need a structured approach. Planning your financial future is similar to what you do for a living."

"Really? How?" he asked.

"Before you take off, what's the first thing you must do?"

"File a flight plan."

"And what's on the flight plan?" I asked.

"All the information, like the starting point, destination, proposed route, number of passengers, fuel needed, hazards, weather, and contingency plans."

"Right! Just like a financial plan," I said. "You need to know where you're starting from, where you'd like to get to, over what time, how much fuel—savings—you'll need, and contingency planning in case things don't go as planned."

"Now, let's think about your office—the flight deck. Whenever I see all those instruments, I find it scary. There's so much information to process. What's your most crucial dial?"

"The fuel gauge," he said without hesitation. "After taxiing, takeoff, and landing, most of our work is spent on fuel calculations and contingency planning, as the aircraft is on autopilot most of the time. But we always have to make adjustments."

"Again, just like financial planning," I said. "You can plan the best flight, but the plane isn't going anywhere without enough fuel. In financial terms, that's your commitment to saving regularly. Even with disciplined saving, you need to invest some funds to achieve the returns needed for a successful outcome."

"But that's the scary bit," Tom complained. "You can lose a lot of money if the stock market crashes."

"Well, yes and no," I replied. "Is turbulence a problem?"

"No, it's just a normal part of flying. Most of the time, you aren't really dropping much; it's just the sensation. Modern planes can handle even extreme turbulence," said Tom. "So, what do you tell people?"

"When the seat belt sign is on, stay in your seat with your seat belt fastened."

"Yet again, Tom, you've described the typical investing journey. You'll experience turbulence—volatility—and as financial experts, we expect it and deal with it. But to most people, it's scary and confirms their worst fears about crashing. The same applies when markets look scary."

"So, Tom," I said, "If you think about financial planning like your day job, you'll find it easy to grasp. Have a plan, put fuel in the tank, don't worry about turbulence because it's part of the journey, and work with someone who understands. Just as I wouldn't fly myself on holiday, you shouldn't do this alone. A good planner will help you get where you want to go."

If you work with a good financial planner, they take the time to understand your desired destination and put together a plan to give you the highest probability of getting there.

March 2025