When I renew the company airplane insurance, I have to fill out a questionnaire that lists how many hours I have flown in my lifetime, in the prior year, and during the last 90 days. Pilots love to brag about their total hours, with the commercial guys routinely claiming 30,000 or more. That’s an impressive number, but my agent tells me that the most important number is not the lifetime hours, but how many have been flown in the past 90 days in the plane that is being insured. This is known as “currency,” and lack of currency is the reason one might find a highly trained commercial pilot involved in a small plane accident that they haven’t spent much recent time in. They have lots of hours, but not necessarily the hours that matter most.
I had this discussion with a pilot friend who is the head of surgery at a large hospital and he laughed as he told me that it is well known that if you want a good surgeon, your usual best bet is not to pick the department head. Though he has done thousands of surgeries over his career, he spends much less time performing them in his administrative position. He is very experienced, but not current. He said a better choice is usually to choose a resident who does surgeries all day long.
The concept of currency translates to most areas of life. As a personal example, I am extremely good at business and investment related math. It comes easy to me and I can do most of it in my head because I continue to do it every day in my job. But if you asked me to work through an algebra problem I would struggle, even though I aced algebra in school. My career doesn’t require me to stay current in algebra, so I have lost the ability to do it.
I have read many financial articles about the tendency of investors to overstate their personal investing skills. They believe they are better at it than they actually are. My personal experience with investors is that as with any skill, they may have been very good at one point in their life when they had the desire and ambition to study it every day, but as they age other things in life start to take priority. In pilot terms, they may have 30,000 lifetime investing hours, but have those skills been kept current?
Managing investments is not a passive activity. If you have been successful at it, be aware of the tendency to fall behind in your currency as you move into and through retirement. The world is increasingly more complex and if you are unable or unwilling to maintain the same level of study and research you once did, think seriously about getting someone to guide you. You don’t want to be that retired commercial pilot who makes a fatal, amateur mistake in a plane you are not current in.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 375 E Riverside Dr, St. George, UT 84790
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