"Mistakes." Now that's a word that not only describes the Madoff mess, but also the recent history of our economy and industry. But the question now is, have all the guilty parties -- from the Wall St. titans to the corner mortgage brokers to the Washington politicians to the overly ambitious homebuyers -- learned enough from the past to not repeat their mistakes in the future?
This is a key question, because history tends to repeat itself. Eventually, the economy will improve, the recession will lift, and consumers will loosen their purse strings. But when money starts flowing again, I'm concerned that people will lapse into the same bad lifestyle habits that got them into trouble. I'm talking about spending too much, borrowing too much, and letting our personal financial needs color our professional judgment. But it's never too late for advisors to learn from their mistakes and commit to not repeating them, even if the revenue spigot opens wide in the near future.
According to Edwin Land, the inventor of instant film and cameras, "a mistake is an event, the full benefit of which has not yet been turned to your advantage." If you've made lifestyle mistakes in the recent past, use them to enhance your life in the future. Here are five steps you may want to take, if you haven't already.
- First, give yourself a serious talking to. Admit your errors. As human beings, our capacity for self-deception has no limits. But until you admit to yourself that your life was out of synch, you will literally be stuck in the past and unable to move forward.
- Second, analyze your mistake so you know exactly what went wrong. What factors contributed to your behavior? What compromises did you make and what logic errors or flawed business practices played a part? Once you identify these things, banish them from your business and your life.
- Third, envision a different outcome. Why did you take the path you did? Would things have turned out differently if you hadn't? Which path should you have taken? What will you do in the future?
- Fourth, change for the better. Once you understand how your life got off track and why, work on changing the underlying attitudes, thought processes, and/or business practices. Resolve never to make those mistakes again, fully understanding that you will make different mistakes because you are human.
- Fifth, keep trying new things. Just because you messed up once is no reason to play it safe in the future. Keep thinking big thoughts, experimenting, and challenging yourself to excel. To stop innovating is to die.
At the end of the day, making lifestyle mistakes can be painful, but they are a part of living and growing as a financial advisor and human being. But don't beat yourself up over them. As Tom Peters once said, "You can't live life without an eraser." Now if only we could erase the Madoff mess.
*For further information, or to contact this author, please leave a comment and your e-mail address in the forum below.