After 20 long years the Carolina Hurricanes are once again the Stanley Cup Champions! Usually, the trophy gets the attention because it is the greatest, most difficult to win trophy in sports. It has traveled the world, been SCUBA diving, and babies have been baptized in it.
The celebrations are fun to watch, but have you ever considered what it takes to win the Stanley Cup? Just the numbers are daunting enough. Not counting preseason games and training camp, teams play an 82-game season in order to qualify for the playoffs. Then they must win 16 more games before they can raise the Cup.
Although often overlooked, a championship cannot be won without work behind the scenes. Humans have a short attention span, so it can be difficult to see the big picture. We’ve all heard the saying, “I don’t need to hear how the hot dog was made, just give it to me!”
As with many things in life, hockey can provide some lessons to improve our financial planning. Below are my top three lessons. As usual, I chose points that aren’t obvious.
In order for a professional hockey team to be a champion, or a successful business, every person matters.
While in college at NC State, I was an intern with the Carolina Hurricanes. I worked in the Community Relations department, specifically with the nonprofit foundation. Community Relations doesn’t seem like a big part of the team on the ice, right?
On my first day, Jim Rutherford, then the General Manager, visited my cubicle. In professional sports, the General Manager handles the contracts and builds the team, so Mr. Rutherford didn’t have time to waste talking to an intern. His kindness taught me a lesson in my first hour as an intern: Everything we do matters.
Mr. Rutherford showed me that all employees matter when pursuing a company’s mission, but let’s look at this in respect to our financial plan. When pursuing financial independence, every decision we make matters. When we know we need $500,000 to retire, that $5.00 treat seems insignificant.
Unfortunately, those little treats can add up. If you saved that $5.00 and continued saving $5.00 each month for 20 years, then you could have $2,068.73, assuming 5% return compounded monthly. No, it doesn’t sound like much, but wouldn’t you rather have $2,000 instead of another piece of cake each month?
My job as your financial planner is to help clients find the balance between enjoying today and preparing for tomorrow. Once we understand how all of our financial decisions matter, then we can move toward investing in our future.
A championship hockey team provides us with a real-world example of how an investment portfolio should work.
There are 20 active players listed on the roster during games. Players have positions as forwards, defensemen, and goalies. Each player has certain responsibilities, but they are also expected to help their teammates when needed.
For example, if a defenseman chases the puck, a forward should “cover” the defenseman’s position. When a team is truly playing together, these actions become second nature. Small steps like this build trust, a necessity for a championship team.
Your investment portfolio should act in a similar way. The portfolio contains a variety of investments, which all should help you reach your reasonable financial goals. As with a hockey team, each investment has certain expectations.
Investments are typically measured by risk. The higher the risk, the higher the potential return. Unfortunately, high risk also
means higher the chance of losing your money.
We try to mitigate that risk by mixing a variety of risk levels in your portfolio. The lower risk investments can be thought of as the goalies and defensemen. They protect your principal, which is the money you invest.
Higher risk investments are like your forwards. In hockey, forwards attack the opponents and try to score. In your portfolio, these investments should provide more chances to grow your wealth. These assumptions only have a possibility of becoming reality because we trust the other teammates and investments to protect us from loss.
Regardless of talent, no team can win a Stanley Cup without a coaching staff leading the way.
If a general manager’s job is to put together a roster of players, the coach’s job is to mold that group into a team. At the professional level, this can be incredibly difficult because these athletes have been told how great they are for their entire lives. The coach must manage egos while preparing the team for success.
I think coaches and financial planners have similar responsibilities. When you work with me, we’re going to discuss where you are in your financial journey and where you want to be. Then we’re going to build a playbook that maximizes your resources, giving you a chance to reach your reasonable goals.
As your coach, I want you to win because I am invested in your success. Financial planning is not a one and done event. I’m not selling you a product and disappearing forever.
Championship teams become families. They come together to pursue a common goal. Their journey creates a bond that can never be broken. That’s the type of relationship I want with my clients.
You don’t have to do this alone. Email me! Go Canes!
