Value for money advice
| How do you establish value? What makes advice worth the money you pay? This is an 8-year old’s water colour depiction of a Pygmy Kingfisher. Clearly he is a birder. He has paid enough attention to detail to capture the essence of this beautiful bird. The blending of the colours is pretty special. Personally, I love it. I also happen to own it. (Full Disclosure: The artist is my son and this was a gift to me, another birder). Is it perfect? Nope. Does it hold value for me? Absolutely. How much value? It is hard to say with certainty but here’s a go: Would I sell this picture for R1,000? Hell no. Would I sell it for R1 million? Yes of course I would. Why? That million could help me spend more time with my family and give them more experiences they would carry forward for ever (I believe Ecuador is a birders paradise). And both of those things I would value more than any material possession. But that is just me. At the end of the day we must figure out what is valuable to us and what are willing to exchange for that. As the example above illustrates it can be approached from different perspectives. There is the Rand and cents perspective: I reckon 90% of people assess value by focusing on monetary value. Probably because it appears to be clearly measurable. At first glance at least. You can save a lot of money by reducing fees, enhancing investment returns, reducing you tax liability, culling unnecessary usage of debt or through a more intentional spending plan. But not all of these ‘monetary savings’ happen all in year-one or even every year at all. Some are continuous and some are once off in nature, unless you take actions to repeat them. So having an accurate upfront number to work with is probably a little trickier than you initially suspect. There is the emotional or mental perspective: What if the value is not measurable in Rands and cents? Like you have comfort in the knowledge that everything will be okay. You have a better understanding of your position and are more confident in your path forward. Perhaps having someone to call when you want to bounce ideas around or are worrying about something specific would be useful to you. You have someone your loved ones can call if anything happens to you. There is a lot in the planning process which is not acknowledged when looking at your fees or investment portfolios returns. But there must be value in how you feel about your financial life and how you would deal with life’s uncertainties. The time and effort perspective: Maybe you can repair or service your own car. But you would have already spent many years developing those skills. And even thereafter, it would still take you a couple of days to inspect the car, source the parts and carry out the work. Each time the technology changes you would have to upgrade your skills. Maybe you want to be doing something else? Maybe you want be spending time with those you love. Playing golf. Reading a book. Exercising. Donating your time to a cause that brings you self-fulfillment. Maye you earn more money focusing on your own business than you would save by doing the work yourself. It is hard to argue how valuable time is. The question remains: What do you value and what are you willing to exchange for that? |
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