Skill vs Luck

All pastimes sit somewhere on a skill-luck spectrum, most are in the middle.

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For example, poker, where the luck of the draw is combined with the skill of playing the hand or golf where a great shot can get a lucky or unlucky bounce.

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At the extremes you have chess (skill) and snakes and ladders (luck).

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Gary Player famously said, “the more I practice the luckier I get”. The more you practice pastimes involving skill the better your outcomes are likely to become, but you can’t get better at snakes and ladders, you just roll dice.

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When it comes to financial planning and investing where are you on the spectrum? Are you just rolling dice? Or do you believe it is a game of extreme skill like chess?

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The truth is that it’s somewhere in the middle, but many behave as if it is at one extreme or another.

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And that’s dangerous – you need to recognise that just “rolling the dice” (doing what seems sensible in the moment) will, at best give you a 50:50 chance of success over time.

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You also need to understand that, however much skill you have, you simply can’t control the situation to the same degree you can at chess because life happens, and things change randomly.

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Quality financial planning and investing is about being able to read the situation, to lean on experience, to know how to maximise lucky breaks and minimise bad luck.

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You can get better at this with practice, but unfortunately you can’t practice as much as you need to, and nowhere near as much as we have.

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With golf and poker, the game ends, the results come in and then you wipe the slate clean and play again and learn a bit from the last experience.

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With financial planning and investing it’s different, the game ends when you do, the slate can’t be wiped clean, you never get to start afresh.

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What you need is access to those who have practiced many times before, who have worked with and on thousands of situations and invested 30,000+ hours in conversations, learning and thinking.

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Those are our reps and our practice; you will never be able to reach our levels, but you can definitely tap into them.