Financial lessons from Shakespeare

INVESTING INSIGHT: Even after 500 years, Shakespeare’s works offer tips to help investors avoid becoming fortune’s fools.

A little-known fact about Shakespeare is that he was a self-made man and quite an astute investor. He used his income from writing and performing plays to build a considerable portfolio of retirement investments, both in his native Stratford-upon-Avon and in London.

He knew well the benefits of investing – “Foul cankering rust the hidden treasure frets, But gold that’s put to use more gold begets” [Venus and Adonis, poem]. He also knew well the benefits of prudence – “Have more than thou showest, speak less than thou knowest, lend less than thou owest” [King Lear].

In Shakespeare’s plays great leaders place their trust in valued advisers, some honest and trustworthy, others deceptive and self-serving. Deception is a recurring theme in Shakespeare’s works. Rosalind and Richard III deceive everyone, Claudius deceives Hamlet and Macbeth deceives King Duncan.

It is clear that a number of Shakespeare’s “trusted” advisers should never have been trusted in the first place. The lesson for you in selecting a financial adviser is clear: you must be certain about your adviser’s motives before you proceed.

Are they concerned about simply selling you products from the get go or are they focused on your financial future?

The undoubted master of deception in Shakepeare’s plays is Iago, Othello’s trusted lieutenant. Iago serves his employer only to gain from him what he feels he justly deserves – “I follow him to serve my turn upon him”. Likewise, if you employ an adviser whose interests diverge from yours this can wreak great havoc on your wealth and life.

Here are our seven tips to help you spot a potential Iago and avoid a financial tragedy:

Shakespeare’s six signs of a bad adviser

1. Avoid advisers who try to rush you. Heed the sage advice of Friar Laurence to the star-crossed lovers, Romeo and Juliet. “Wisely and slow; they stumble that run fast” [Romeo and Juliet]. Any sense of rush you get from a potential adviser is a good indication that you are talking to a salesperson. There are NO advice or investment deadlines that you should rush for; be patient and take your time.

2. Avoid advisers who charge commissions, fee rebates and/or volume bonuses. Stick to professional advisers who will quote you an upfront, fixed-cost fee for their advice. Avoid the Shylock types who pursue their pound of flesh by locking you into a complicated fee structure, which may also include kickbacks in the form of life insurance commissions – they have a “lean and hungry look … such men are dangerous” [Julius Caesar]. Be wary, as these “advisers” can be highly convincing, after all they are trained salespeople!

3. Avoid advisers who do not seek to include both you and your partner in all discussions. An adviser should include and unite a couple, not just deal with one person. “Let me not to the marriage of true minds admit impediments.” [Sonnet]. All advice provided must take account of the views, concerns, goals and aspirations of both of you.

4. Avoid advisers who seem to have “answers” before they even inquire about your needs. A potential adviser should let you do most of the talking and actively listen to you what you say. “Men of few words are the best men” [King Henry V]. Chide them if they seek to dominate and control the conversation rather than you – “this cuff was but to knock at your ear, and beseech listening” [Taming of the Shrew]

5. Avoid advisers who over-complicate things. Advisers who complicate financial matters should not impress you. Instead, seek one who can explain complex issues in plain English. A great adviser should be able to explain clearly the typical products they recommend, especially the risks of those products – “He was wont to speak plain and to the purpose, like an honest man and a soldier” [Much Ado About Nothing]

6. Avoid advisers who promise you high returns. Don’t select an adviser based on who “promises” you the highest return. If it sounds too good to be true, then it generally is: remember Westpoint and Storm Financial. For one thing there are no “promises” or sure things when it comes to investing; anyone who states otherwise is either lying or ignorant. Such ambition may sound seductive but it is merely “Vaulting ambition, which o’erleaps itself and falls on the other” [Macbeth]. The only way you can expect to potentially receive a higher return is by taking more risk. Investing is slow and relatively boring, especially when compared with gambling, which is fast and exciting.

Whereas in the Enlightenment power still lay in the hands of the monarchy and courtiers, today power lies in the hands of the captains of industry.

Shakespeare would find rich content in the lives of the Gates, Buffetts, Rockefellers, Carnegies, Murdochs and Packers. The issues they face are the same and their ability to choose, hire and fire qualified advisers whom they can trust is central to their success.

We have no doubt that if Shakespeare were alive today he would have sensibly followed the lead of so many of his compatriots and migrated to sunny Australia. We think he would have closed his long, successful run at the Globe Theatre in London and teamed up with the wonderful Sydney Theatre Company.

Undoubtedly, he would have set himself and his family up pre-retirement with a tax-efficient SMSF. We like to think that Shakespeare would have sought out trusted advice from a fixed fee, independent adviser who would have helped him strategically roll his income- producing property portfolio into his SMSF.

More likely, given he was a genius, he would have done it all himself!

In addition to our passion for finance we have a passion for great literature. We believe even 400 years after his death, Shakespeare has much to teach us about finance and indeed life. Lots of characters in Shakespeare’s plays were sought and called upon to give advice. Likewise, many people today seek advice they can trust. If you are seeking a great financial planner who you can trust, why not heed the lessons of the Bard?

By independent financial planner Tim Mackay.

Quantum Financial

About Quantum Financial

Quantum Financial is Australia's most awarded financial planning practice. We advise a select group of successful professionals, business owners and jet setting retirees. Our website is here

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