The phrase “the more you know, the more you know you
don’t know” is generally attributed to Socrates (a wise man according to many). How can these words improve
your financial wellbeing? You will have to read on to find out, or perhaps you already know enough.
I’ve heard that education is the formal process of gaining knowledge whereas knowledge is informally acquired
through experiences. The point is this: As you acquire a better understanding of whatever topic is of
interest to you, the more you realize how much more there is to learn about that topic. This certainly
applies to financial planning, specifically the areas of investment, tax and estate planning.
Whether you invest your money on your own or use the services of a financial advisor, be prepared for events
that you did not anticipate. These surprises could be positive or negative, but the fact that you are
surprised should make you aware of your lack of knowledge in this area. I cringe when I see or hear an
advertisement that claims to make investing easy — it’s not! If it were, then no one would lose money, would
they? The more you know…
The negative surprises can be minimized and controlled. This is accomplished through the use of an
“Investment Policy Statement” (IPS). This document has the ability (if done correctly) to coordinate an
enormous amount of knowledge about what you want to achieve with your investments and guide you and your
advisor throughout implementation. For more information about an IPS, please refer to a previous article I
wrote entitled “Are You Emotionally Involved?”
Many individuals try “do it yourself” investment planning, but it takes a rare breed to enjoy “do it
yourself” tax planning. I believe the 37th edition of the Practitioner’s Income Tax Act 2010 is
2,600 pages in length. I haven’t read it cover to cover yet, have you? My greatest benefit to clients with
regard to tax planning is recognizing when to bring in professional advice, whether it be their own
accountant, a tax accountant or a tax lawyer. The more you know…
I am not aware of anyone who enjoys “do it yourself” estate planning, but this is an area that many
individuals have taken on personally. I should clarify that the majority of these individuals are not aware
that they have taken on this responsibility, but their inaction has resulted in this being the case. Once
again, being able to recognize when to bring in professional tax and legal advice is a necessity. The more
you know…
Over the years, I have gained knowledge and continue to be educated in the many areas that comprise the
financial planning world. On an ongoing basis, I discover new facts, trends or ideas that make me aware of my
limitations. Fortunately, they also create the need to learn more about what I do and the world in general.
If you discover that there is more you don’t know than you do know about an area that interests you, consider
it a step in the right direction.•
Peter Murray is a senior financial advisor with Assante Capital Management Ltd. (Member CIPF) in Calgary.
Email your questions or comments to Peter at pmurray@assante.com or check his website at
assante.com/advisors/pmurray.
