I was challenged recently by a quote that has been ringing in my head ever since. Perhaps it stuck with me because it first seemed to contradict my own conviction—that the missing ingredient in most financial plans is thoughtful intention, bringing a greater sense of purpose to our planning—but I now see the quote more as complementary than contradictory.

Let’s wrestle with this momentarily and see if we can arrive at an actionable a-hah:

“Direction, not intention, determines our destination.”

The quote, attributed to author Andy Stanley in his book “The Principle of the Path,” has immediate implications for our financial planning for this reason: Intention without action accomplishes nothing. 

This week, we'll explore what's possible when BOTH our intentions and actions are aligned, and Tony updates us on the major economic news of the week--and the markets' response.

Tim

Tim Maurer, CFP®, RLP®

Chief Advisory Officer

SIGNATUREFD

In this FLiP weekly you'll find:

• Financial LIFE Planning:

  • Why Your Intentions Aren’t Enough

• Quote O' The Week:

  • Joel A. Barker

• Weekly Market Update:

  • Be Objective

Financial LIFE Planning

The Physics Of Personal Finance

Indeed, while action without intention may amount to less than is possible, intention without action amounts to zero.

Furthermore, the best indicator of our future action is our track record to date—our direction. The temptation in our aspirational age may be to resist such a notion or even label it defeatist, but didn’t Sir Isaac Newton lay this one to rest in 1687, when he concluded, “An object at rest stays at rest and an object in motion stays in motion…”?

But fortunately, that’s not the end of the natural law, because our direction can be shifted when “acted upon by an unbalanced force,” and we can be that very force. If we choose to act.

I wonder if it’s possible that the social media age may have created an imbalance, where we’re inclined to over-celebrate intentions, hopes, and dreams even before they’ve been realized, where we applaud the form even if it has yet to function, where the aesthetic is praised above the practical?

To be clear, our intentions aren’t worthless. Peter Gollwitzer, the New York University social psychologist, points out with his work on Implementation Intentions, that we can use our intentions as a training ground for future positive actions with thought patterns like, “Whenever situation x arises, I will initiate the goal-directed response y.”

UCLA professor and author, Hal Hershfield, also demonstrates in his book, “Your Future Self,” that we may better plan for the future—and act on those plans—when we use our vivid imaginations to envision that ideal future.

So our intentions are useful, but only to the degree that they lead to a change in direction.

What can it look like, then, when our intentions and actions are aligned? It can be nothing short of world-changing, according to Joel A. Barker, the originator of the now-colloquial “paradigm shift,” who said, “Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.”

Can you think of an intention in your financial life that is in contrast with your direction—your current and past pattern of behavior?

Choose only one for the moment, because sometimes it is the combination of competing motivations that lands us in a place of paralysis. What is one of those things you’ve been saying, “I’m going to…” that hasn’t gone anywhere?

We’re tempted to believe in the triad depicted below that successful implementation of our success pursuits is linear—beginning with the right attitude, followed by the mastery of a particular technique, that is then followed by the desired action:

But that is incorrect. Every successful pursuit begins with action—our behavior—an action that, when repeated, reshapes our attitude and refines our technique.

So, what is that intention:

• Saving more
• Spending less
• Asking for help
• Buying life insurance
• Updating estate planning documents
• Reevaluating or reallocating your portfolio

And what is the very next action that is designed to redirect your current direction to a pattern of behavior that is worthy of your best intentions?

This article was initially published in Forbes.com.

Quote O' The Week

This one is definitely worth another read:

Joel A. Barker

“Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.”

Weekly Market Update

Markets were mixed for a second consecutive week, with international stocks leading the way down.

• + 0.22%.SPX (500 U.S. large companies)
• + 0.17% IWD (U.S. large value companies)
• -  0.54% IWM (U.S. small companies)
• -  0.79% IWN (U.S. small value companies)
• -  1.57% EFV (International value companies)
• -  1.33% SCZ (International small companies)
• -  1.62% VGIT (U.S. intermediate-term Treasury bonds

Be Objective

Contributed by Tony Welch, CFA®, CFP®, CMT, Chief Investment Officer, SignatureFD

I was in North Carolina visiting clients last week, giving a live version of our recent extended Cutting through the Noise webcast. Early in the presentation, I attempt to frame a major difference between politics and investing – emotion. In politics, evoking strong emotions can be a major goal. One needs to energize their potential voter base and turn them out to vote on election day.

But in investing, emotions can be destructive. Of course that doesn’t always have to be the case, but it often is. We want to remain objective, tying our investment strategies to robust indicators. In any event, if you want to hear some more election perspectives and how policy may influence corporate earnings, inflation, Fed policy, and economic growth, I encourage you to give the webcast a listen.

The Message From Our Indicators

Last week was jobs week and it was a generally positive batch of data on the labor market. The Job Openings and Labor Turnover Survey for August showed that job openings picked up. However, hire and quit rates are still low. The ADP payroll data beat expectations, showing a pick up in job growth. And on Friday, the official BLS Employment Situation Report was something of a blockbuster.

That report showed an addition of 254,000 jobs in September, a downtick to 4.1% in the unemployment rate, and average hourly earnings increased by 4% year-over-year. Also released last week, the ISM services purchasing managers index showed a robust expansion in the service sector in September. Our perspective has been that as long as workers have a job, and real incomes are rising, growth in the service sector could offset weakness in manufacturing and housing. Last week’s data was therefore encouraging.

Importantly, corporate fundamentals have remained supportive of a positive macro and market backdrop. Earnings have been expanding this year and are likely to have done so again in Q3. Additionally, profit margins have been expanding. Fundamental trends are creating something of a positive feedback loop whereby positive profit growth results in positive labor market trends, supporting consumption, and feeding back again to profit growth. That cycle is likely to be disrupted eventually but the economic and corporate fundamentals remain positive for now.

Turning to market trends, September finished on a high note. The S&P 500 Index closed the quarter at an all-time and 52-week high. According to Bespoke, that has rarely happened as September has historically been the most challenging month for investors. In the quarter, market participation broadened out. Small cap stocks were leaders, and international markets also performed well.

Broad participation has historically been consistent with staying power for a bull market. But Bespoke also reminds us that the market was up for four straight quarters. Historically, while positive, the average returns in the fifth quarter following a year-long winning streak have been lower than average. Market sentiment is highly optimistic, so a near-term bout of volatility may be on the horizon. But the long-term trend evidence remains bullish as well.

Always bullish on your weekend,

Tim