HOW TO AVOID A SHIPWRECK
The standard manual for navigating the coastal waters of the British Isles is called, The Channel Pilot. It details the distances between hidden reefs, identifies strong currents, and alerts sailor to other hazards unique to the treacherous coast of the UK. If Captain Pastrengo Rugiati had consulted his copy, alas, he did not have a copy on board, one of the largest oil tanker disasters in history could have been avoided.
Pollard’s Rock, is part of the Seven Stones Reef that lies just northeast of the Isles of Scilly off the coast of Great Britain. On March 18th, 1967 The oil tanker Torrey Canyon, one of the largest in the world, ran right into Pollard’s Rock; in broad daylight.
The night Prior to the accident, Captain Rugiati had turned on the automatic navigation of the ship, plotting a course to navigate around the Isles of Scilly, rather than trying to cut through the straight separating them from the mainland. The first item that the Channel Pilot would have alerted the captain to, is that the currents in this area are some of the Stongest in all of the Atlantic Ocean. As a result, when the Isles first appeared on the radar later that night as the first mate was on duty, the Torrey canyon was no longer heading out to sea, around the Isles of Scilly, but was instead heading into the channel between the Isles and the mainland. The First mate immediately changed course and redirected the vessel onto a new course. Because the captain had neglected to leave any sort of a route plan, the first officer hedged his bet, and steered the vessel directly towards the Isles. Considering there was still ample time to then navigate around the Isles, or through the channel this decision bought him time until he was able to consult the captain.
Once woken, the captain made a snap decision to alter his original plan, and instead of heading out to sea, he changed the route to cut through the channel. After all, since they were already nearing the entrance to the channel, this would be an opportune time to take a shortcut, while going around the Isles, would at this point add several hours to the trip.
Navigating the channel is not a particularly difficult task. The only real obstacle is the aforementioned Seven Stones Reef. Had Rugiarti had a Channel Pilot aboard the ship he would have gained to critical bits of insight on the channel. First, if you are going to pass through the channel, be careful. The weather changes quickly and visibility can be low. Secondly, pass between the Seven Stones and the mainland, NOT between the Seven Stones and the Isles of Scilly.
Captain Rugiarti of course did not know this key bit of information so he made the logical choice, of taking the most direct route, navigating between the Seven Stones and the Isles, exactly where the manual would have told him not to go. As Torrey Canyon approached the narrow gap it was aiming for, several small fishing boats came into view on the radar. In an effort to avoid the nets, Rugiarti adjusted course and temporarily paused the sweeping turn he was making through the gap. What he again failed to account for however, is that those same forces that had pushed the tanker off course overnight, were still working on it, and the tanker had continued to drift closer and closer to the Seven Stones.
Inertia is a powerful force. For a vessel as large ad Torrey Canyon, it takes a whopping five miles to make a 90 degree turn. Thus when the Captain realized the precariousness of his situation, it was simply too late, and the massive vessel plowed straight into the submerged rocks.
Inertia is also a powerful force when it comes to human psychology. In fact, it could be argued that it is what is responsible for this accident. In particular, a concept known to psychologists as plan continuation bias. The idea is simple. Captain Rugiarti had a plan. Than plan was to reach his destination as quickly as possible. Whenever problems arose, he continued on with that plan as best he could. Plan continuation bias causes us all to lose the ability to think about alternatives. We are so consumed by staying on the plan we have set, that we rarely stop, take a breath, and evaluate to ensure that the plan we are on, is even a good plan to begin with. Had Captain Rugiatri done this, he would have first realized, that he could have still navigated out to see, avoiding the channel all together, but he didn’t. Had he paused to look up, he could have quickly seen, no chart needed, that the channel to the right of the seven stones was over twice as wide as the one he was trying to squeeze through. But he didn’t. He had a plan. And he stuck to it. It just wasn’t a very good one.
As a financial planner, I obviously talk all day with clients about the importance of having a plan. And if you paid attention to the story, you would have seen, that if Rugiarti had simply written his plan down, the first mate would have known to steer the ship out to sea as soon as he realized they were off course. Having a plan would have circumvented the entire issue. Having a solid financial plan is one of the most important things you can do if you want to achieve long term financial success. A financial plan outlines all of the major steps that need to be taken, as well as highlights any weaknesses in your current situation.
But sometime things don’t go to plan. Sometimes unforeseen circumstances like fishing boats can pop up.
In my world that plan looks a lot more like a model of retirement income, or a projection of future growth. I stress the importance of those plans with my clients because it is what helps us stay on course towards reaching our destination. But I also stress to them the importance of being aware of ever changing conditions. And a big part of that means not being so caught up in their financial plan that they forget that occasionally we need to look up, and reevaluate. There may be new investments available now, that didn’t exist when we first made the plan. A global pandemic may completely change not just what the market looks like, but what life looks like. In fact, about the only part of the plan that we can really count on, is that it will have to change.
A good financial plan is not a static document outlining the steps that need to be taken. It is an outline of what we hope to accomplish, but it leaves room for countless adjustments, and needs to be completely reevaluated often if we want it to remain effective. We do not know exactly when we will get blown off course by the winds and currents, but if we pause often to take a new bearing, we can avoid running aground on the submerged rocks waiting for us.
If you ever find yourself sailing the English Channel, a copy of the Channel Pilot, would be immensely valuable. If you find yourself attempting to navigating investments, insurance, benefits, taxes, and debt, you may also be wise to consult various resources to help you make the right decisions. There are however two main problems with the resources designed to help you navigate financial waters:
First, depending on which source you consult you can get wildly different advice. An insurance agent will try their hardest to convince you that annuities and life insurance are the solution to all of life’s problems. While a financial book may tell you all you need to do is buy an S&P 500 index fund. Sifting out which is right and which is wrong can be no small task.
Secondly, while the Channel Pilot can tell you exactly when and where to expect hidden rocks and sandbars, no source of financial knowledge can perfectly alert you to upcoming obstacles. Even financial professionals if they are being truly honest, have no idea when the next market downturn is coming. I would even argue that the more someone tells you they know what is coming, the less you should believe them. To keep with the Channel Pilot analogy, what a financial advisor can tell you, is when to expect bad weather, where to look out for strong currents, and how to adjust to get back on track.
If you prefer to go it alone, and navigate financial water by yourself, you absolutely can. To make one more analogy about the Channel Pilot, the internet is full of guidance just like you would find in that book to help you navigate. Never allow a financial advisor to make you think they are inherently smarter than you or have some secret knowledge that you can never hope to attain. The simple reality is that anybody and everybody is fully capable of managing their own investments and financial plan. Just like anybody and everybody is capable of changing their oil, mowing their lawn, or potty training their dog. The reason you would hire a financial advisor, just like why you would hire someone to file your taxes, or take out your trash, is because you do not want to spend the time doing it, or learning how to do it.
So let that be the lesson, whether you know it or not, you have embarked on a long financial journey. If you want to safely and successfully reach your destination you will need a plan, and a guide book. If you don’t want to take the time putting together that plan, or reading that guide book. Hire someone to do it for you.