Now is the time to AVIATE, NAVIGATE and COMMUNICATE.
“There is no emergency in a pandemic.” – Aaron Mishler | Army medic and Ebola veteran.
My husband was a flight paramedic when I met him and now works at a local hospital. Apparently, it was a nurse treating Ebola patients in Africa who coined this phrase which is now used in training and preparation for Covid19.
“But people are dying! Of course, it’s an emergency! How can anybody, let alone a medical practitioner, believe in this?” I asked.
He explained to me that it means there is no reason to take risks by not wearing the correct protective gear when dealing with pandemic patients. You may save one life by rushing in unprotected to an infected patient in distress but lose out on saving hundreds more if you yourself get infected. Calm down, don your PPE and treat the patient.
It may seem a bit far removed from investments and aviation, but I feel we should apply the same logic. Calm down, ignore the frantic panic and noise and take the correct precautions and continue. Panic decisions in financial planning only lead to regret. No financial planning decision has to be made on the spot and in haste. You need to take your time – Aviate, Navigate and Communicate, just as you would when encountering an abnormal situation in the cockpit.
Keeping your eyes on the long-term prize might sound a bit outlandish in a time where the JSE has lost such a large percentage over such a short period. I know most of you are cringing when looking at your investment loss over the last couple of weeks. The fact is, that over the long-term market ups and downs are part of investing. Sanlam’s Andrew Evans recently reminded investors that “macro events, even ones as scary as the current pandemic, don’t usually have a material long-term impact on the true (intrinsic) value of high-quality companies.” Having a well-diversified portfolio is still the best way to keep your money invested.
If at all possible, keep your retirement contributions going in the same balanced and diversified long term strategy – the way you would have, had the markets been in a better place. Do not lose sight of your long-term goal. When the crisis has passed – and it will – you will still want to retire comfortably.
Sadly, many airlines and operators are unable to keep their flight-crew on the payroll should this no-fly period continue and as such you may have to accept a reduced income or with retrenchment have the option to withdraw your pension/provident fund. This might seem like a great cash injection, but I urge you to not knee-jerk this decision.
The fact is, there is no certainty as to when markets may recover, but if you sell out of the market during such a low, you may miss out when the bull starts to run again. When it does, it’s unpredictable and fast, and you can’t afford to be disinvested during the best-performing days. Do not make frantic portfolio changes to any of your investments.
Most, if not all retirement funds have suffered significant short-term losses lately and if you withdraw into cash now, you essentially realise the losses. By remaining invested, you will allow your investments to recover. There is a lot of noise and fear-mongering, and it is in times like these that innocent people become victims of cyber-crime or reckless financial advice – do not fall victim to either. Try to steer clear of distractions and be vigilant and steadfast in your path towards your goal. Remember that scare-tactics have no place in investment-planning and you should be wary of any opportunities that seem too good to be true.
“If you’re faced with a forced landing, fly the thing as far into the crash as possible.”— Bob Hoover
Have a sober look at your current financial situation and discern whether you have a Land As Soon As Possible or a Land Immediately type of in-flight emergency.
If you are currently at the PAN-PAN stage, with either some savings or still have some form of income, it is critical to now navigate the situation correctly. Prioritise and re-adjust your budget. This means that you may have to prioritise your retirement savings or life insurance above your satellite TV subscription. It may mean you need to explore other avenues to generate some additional income. I know for most pilots this is hard because flying is all we have been doing our whole lives, but it is not impossible. Remember to make sure of any possible penalties on the contracts you wish to exit, your accredited financial advisor will be able to help you navigate the booby-traps.
New default regulations to the Pension Funds Act were implemented from 1 March 2019 and these allow you to become a paid-up member of your pension fund even after you have left employment. Keeping your funds here until the markets recover will not only save you from realising your losses but on advice fees and commission as well as platform and other fees when moving the funds to another preservation or retirement fund. I am not saying that this option would most certainly become more attractive later but in the current pandemic economy staying put is an option you need to consider. Obtain credible information and discuss it with an accredited financial advisor to make an informed decision suitable to your circumstances.
If you are at MAYDAY stage and have no income or savings left you still have options as to how you go about dealing with your finances – keep flying your aircraft! If you have re-adjusted your budget and still have no way of continuing your contributions, speak to your financial advisor about relief options available for both investment and risk contributions. Make sure to get all the facts relevant to the possible withdrawal of your pension/provident fund. Withdrawing from one pension fund to invest in another type of retirement savings investment may sound like a responsible thing to do, but you would still be realising the losses on the current fund.
Make sure you investigate whether your employee risk benefits may be continued after the end of employment. Often you might be able to convert your group life cover into a policy in your own name without underwriting. This is most certainly beneficial in a time where underwriting is adapting to the increased risk, and the continuation option allows you to access cover which may not currently be available to aviators or which may cost you more.
When you are committed to any forced landing, you will most likely use any resource possible to protect yourself and your passengers from injury and death. If you can avoid cancelling your risk insurance in a period where your likelihood of getting ill is substantially higher, please do so. Your family and dependants are still relying on you to take care of them should the unthinkable happen, just as your passengers would.
Lastly, in any type of emergency, you need to communicate. Communicate with your flight deck crew and passengers, communicate with Air Traffic Control and Emergency Services.
This is not the time to suffer in silence.
- Speak to your employer, try to understand their decision-making and gain all the possible information from your human resource department.
- Speak to your bank. Most of the major banks are offering different kinds of relief options at the moment. Find out how you can make use of these options to tide you over in this storm.
- Speak to your creditors. This may seem counterintuitive, but many landlords and creditors are more understanding and accommodating than you think, find out what your options are and be honest about your situation.
As a financial advisor and as a pilot, I am here to help you. I want to guide and assist you where I can. This is not a time for advisors to profit from your misfortune, and this is not our objective. You have supported me as my clients and friends, and now I have the opportunity to be there for you. Speak to me!
“If you can walk away from a landing, it’s a good landing. If you use the airplane the next day, it’s an outstanding landing.” – Chuck Yeager
We are all looking forward to the day when we can once again take to the skies. Perhaps I might take an extra 5 minutes to enjoy the sunset and the clouds on the next flight, perhaps relish the sound and smell of the turbine whining into full RPM on start-up. To enjoy these small parts of flying again, we need to survive this crisis. We need to walk away from this forced landing in good health, irrespective of the plane’s condition. Take care of your mental and physical well-being. Reach out to friends and fellow flight crew. In this time of separation, we need to stand together and carry each other more than ever.
Wishing you safe landings and favourable winds.