Are You Fit to Make Big Decisions?
Not long ago I was at a social gathering in Hong Kong and bumped into a grey-haired old friend I hadn’t seen in quite a while.
Like me, he’s a long-term resident of Hong Kong, and a foreigner. He was an early player – in many respects a pioneer – in one part of the financial sector in Asia, and very successful. He has a fine reputation, well respected, widely considered a very smart businessman, etc.
I don’t know his exact age, but I’m guessing he’d be in his early to mid-70s.
I asked him what he’s been up to, and part of his answer surprised me and struck me as very interesting. His company is still going strong, but he has sharply curtailed his own role in making big business decisions. Why? Because he reckons his judgment is not as sharp as it used to be, so he limits his role, as a risk management measure. He also mentioned that in today’s business environment, there are abundant sharks ready to fool, cheat, or “eat” you.
Common sense would tell us that abundant experience should yield expertise and exceptionally good judgment, right? Yet my friend suggests that age can also dull one’s ability to make certain types of business decisions. He is not afraid to admit that fact, which takes a high degree of self-confidence and a certain amount of courage. I respect him for that.
He is in perfectly good health, by the way.
As we talked, my friend shared two experiences which impacted him deeply. He had two older family members, both now deceased, who were also very successful in business during their careers. Both made fortunes, and both continued their involvement in business and investment decision-making well past the normal retirement age. Unfortunately, during those golden years, both of them made disastrously bad investment decisions and lost everything. My friend took this to heart and decided he would avoid the risk of a similar bad outcome.
I think one moral of the story is that one’s appetite for risk should be tempered in the years before and after retirement, because the consequences of a bad investment decision can be catastrophic. It also makes sense to establish sensible limits around the scope of one’s sole decision-making in advanced years. This of course presupposes that there will be people nearby in whom you trust.
Apart from old age, there are other circumstances which can crop up in life, in which great care should be exercised with regard to business and investment decision-making. One is profound grief, and another is life-threatening illness.
This is one instance where common sense needs some qualification. Our fitness for decision-making does not progress in a straight linear fashion. Like physical fitness, there are ups and downs along the road, which are worth paying attention to.
When the time comes, it’s important to be able to admit that reality gracefully, and delegate more authority to others. Failure to do so could prove very costly.