For the next two weeks, the world's eyes will be on the Winter Olympics. Inevitably, we'll focus on those athletes who excel, pulling away from the pack with multiple medals. As we watch these athletes achieve their goals, there are some important lessons for average Canadian investors seeking guidance on hitting goals of their own.
A clear plan
The first necessary element for Olympic athletes is a plan of action that clearly spells out their path to the podium. Forty years ago, you could show up with talent alone and aspire to medal - today it takes dedicated effort and a clear plan of action to even have a chance of winning.
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A clear plan of action is just as important for today's individual investor. When life spans were shorter and the average male retired at 65 and died at 70, a retirement plan was of less importance. Just as today's Olympians can't hope to win without a plan, a clearly spelled out, written plan is essential for individual investors to maximize the odds of hitting their goals.
A long-term view
For many baby boomers, Nancy Greene Raine still epitomizes Olympic success. In a recent interview, she talked about the fact that at one time Canada's Olympic team could hope to compete by planning one Olympic Games in advance. For Vancouver, the planning began eight years ago - that's the only way Canada could even hope to "own the podium."
Investors need to take a similar long-term view on their investments. If you wait until five or even 10 years before retirement to begin planning, you risk leaving it too late. The earlier you start, the better your chances for success.
Hard work, commitment
The most decorated Winter Olympian of all time is Norwegian cross-country legend Bjorn Daehlie, who won eight golds and four silvers over three Olympics. The first time he tried, he failed to make Norway's junior team, but through sheer dedication and hard work he improved every year. He still holds the record for fitness in one of the standard tests to measure athletes' fitness.
When it comes to achieving financial goals, hard work is just as important - for most Canadians, it will take a day-to-day commitment to sensible spending and a focus on saving. Unless you plan on getting lucky with the "lottery ticket" approach to retirement, hard work is just as important for investors as it is for Olympians.
Resilience
With its focus on sports such as skiing, skating and sliding, the Winter Games are full of stories of remarkable comebacks from horrific injuries. Perhaps none is more extraordinary than renowned Austrian skier Herman Maier. Known as "the Herminator," he recovered from a spectacular crash at the '98 Winter Olympics to come back and win two golds. Subsequently, a motorcycle accident in 2001 almost claimed his life - and once again he came back to win on the world circuit.
Canadians need similar fortitude to come back from reverses in their investments. Given market disappointments in recent years, it would have been easy to throw in the towel and switch to GICs. But just as Olympic athletes must work through setbacks to reach their goals, sometimes investors need to reach deep to bounce back from disappointments.
Teamwork
Today's Olympic athletes are supported by a phalanx of trainers, nutritionists and psychologists (U.S. skier Lindsay Vonn travels with her "Vonntourage" of two trainers, a ski technician and her coach, who's also her husband). While there will always be individualists - in 2007, New Hampshire's Bode Miller announced that he was leaving the U.S. ski team to race as an independent (he returned to the team in 2009) - even athletes who race in individual disciplines almost always operate as a team.
In the same way, some investors will always be able to succeed on their own. For most, however, having the right financial adviser is essential to building a plan and staying on track. If you don't have an adviser who you like and trust and who inspires confidence, you need to keep looking. Just as athletes need the right coach to succeed, so most Canadian investors need help as well.
Confidence
There have been many upsets at the Olympics, but perhaps none greater than the 1980 U.S. hockey team's "Miracle on Ice" defeat of Russia for the gold medal. Crucial to their success was coach Bob Johnson - "Bob made us believe we could win," one player said, "and that conviction carried us through the moments of doubt along the way."
Canadians need the same conviction to achieve their long-term goals. In any long path, there will inevitably be disappointments - a sense of realistic optimism and confidence are critical to carry us through those periods.
For the next couple of weeks, we'll all be glued to the screen and cheering our athletes on. While doing that, though, we may want to reflect on whether there are some important lessons we can take away to achieve important goals of our own.
Dan Richards is president of Clientinsights. He is a faculty member in the MBA program at the Rotman School at the University of Toronto.