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Bridging the Gap
By: David Thome, CFP®, Consultant, The Wealth Office™
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| In 1847, Charles Ellet Jr. stood at the edge of the Niagara River overlooking Whirlpool Rapids with a daunting task ahead of him. He’d been commissioned by a Canadian-American partnership, The Bridge Co., to construct a bridge near the Falls to create a more efficient route between New York and Toronto that didn’t involve a long trip around the Great Lakes. This exact location, approximately one mile from Niagara Falls, had been chosen because it offered the shortest distance between the two landmasses. Separated by a gorge 800 feet wide and 250 feet deep, it was soon determined that the banks of the river could not be linked by traditional methods available at that time. Unable to establish the initial connection, he turned to his supervisor Theodore G. Hulett for advice. Hulett suggested that Ellet organize a kite-flying competition to see who could fly a kite across the gorge, offering a $5 prize. On the second day of the event, a young American boy named Homan Walsh successfully navigated his kite from the Canadian side of the river to the American shoreline. A small cord attached to the kite string was pulled across, followed by a series of stronger cords, until finally a thick, high-tension cable spanned the gorge, creating the foundation of what would become the first Niagara Suspension Bridge.
Over the next 50 years, advancements in technology spurred a seemingly endless demand to enhance the speed and efficiency of travel and commerce across the border. In response, The Bridge Co. sought the help of the country’s most skilled designers and structural engineers to build upon their early successes, most notably John A. Roebling who would later be chosen as the Chief Engineer for the construction of the Brooklyn Bridge in 1869. In total, John Roebling and his counterpart Leffert Buck, oversaw the development of three increasingly strong and modernized bridges.
The story of The Bridge Co. and Charles Ellet Jr. shares several parallels to the financial journey of many. Regardless of your place on the path—asset accumulation, retirement income distribution or the creation of a multi-generational legacy—lessons can be learned from this story. In order to overcome challenges and uncertainties ahead, we often think a complex and sophisticated bridge requires building on day one. As the story illustrates, successfully reaching your objectives is not one decisive action; it’s a series of smaller steps continuously built upon until you reach the destination.
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| • Bridge the gap – A seemingly elementary exercise of flying a kite created the initial connection between the shores of the Niagara River. It took some effort (almost 48 hours), but it accomplished the job. In the same way, planning for your future requires establishing that initial link, often in the form of written and prioritized objectives. This too requires some time and effort, but only once completed can you start to bridge the gap.
• Build your team – The ambitious duo that formed The Bridge Co. likely understood much of what it entailed to construct a bridge. They also recognized the need for outside help to successfully complete the project. The first suspension bridge required a relatively small team and skillset when compared to the much larger and more sophisticated structures later developed. Likewise, build your team based on the size and scope of your unique plan. For some, that may include your team at DiMeo Schneider & Associates, L.L.C. and a CPA, while others may need to rely upon a small army of consultants, lawyers and other trusted professionals. The do-it-yourselfer in all of us says we can figure it out on our own, but a skilled team often gets the job done more quickly and efficiently.
• Learn from experience – As the bridge project ran its course, experiential data was gathered on what worked well and what didn’t work so well. The creation of the Pony Express in 1860 allowed for these stories of success and failure to be disseminated across the country and were almost certainly taken into consideration as new bridges were designed. I would consider building bridges a high stakes job, one that assumes a high degree of responsibility given its low margin for error. Therefore, it’s difficult to imagine a bridge builder repeating the failures of the past if avoidable. Building a secure future for you, your family or your legacy is also a high stakes proposition. Yet some investors continue to approach it with a cavalier attitude. By leveraging the knowledge and experience of The Wealth Office™ at DiMeo Schneider & Associates, L.L.C. and seeking information to understand and learn from investors’ past mistakes, one can move forward with cautious optimism in the ability to avoid foolish errors down the road.
• Focus on the long-term – Even with experience and knowledge in hand, bridge builders and engineers had no way of knowing exactly what setbacks would occur nor when they would occur. It is likely they considered and weighed numerous potential perils before they moved forward with construction. Almost daily, we hear a chorus of prognosticators offering their short-term narrative on the next risk or opportunities to hit the financial markets. Calls for “melt-ups” and “melt-downs” are made with equal fervor and often backed by enough data and financial jargon to make your head spin. The reality is that nobody knows where the markets are headed in the short-term. Trying to determine what the next big market catalyst will be, when it will happen and how investors will respond is akin to trying to figure out what you will do the next time you are surprised. Our recently updated capital market assumptions provide the structural framework to focus on reasonable long-term expectations and allow you to prepare for a wide range of potential paths forward. When unexpected setbacks inevitably occur, avoid making short-term, emotional decisions. Instead, take a step back, review your plan, consult your team and move forward with your long-term objectives in mind.
• Stay within your circle of competence – The Niagara Bridge Co. built bridges because that’s what they were good at. They didn’t get halfway through the construction of a bridge only to redirect a portion of their workforce to building planes for a faster route to the other side. As an investor, it’s of utmost importance that you have a good grasp on what you know and what you don’t know. In other words, individuals should understand who they are as an investor (i.e risk tolerance, time horizon and behavioral profile). By leveraging our Frontier Engineer™ and Portfolio Engineer™ you can remain vigilant in maintaining the appropriate asset mix at all times. The herd mentality may urge one to add more risk when markets reach new highs, shun risk when markets plummet and look for shortcuts in between.
• Do the worthwhile work – The constant building, rebuilding and maintenance work performed by The Bridge Co. between 1847 and 1897 must have seemed never ending. While stressful and arduous at times, their finished work still stands today, more than 120 years later. I would call that a plan well-constructed and successfully executed.
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| Please contact any of The Wealth Office™ professionals at DiMeo Schneider & Associates, L.L.C. for more information and assistance reviewing your long-term objectives and strategic asset allocation.
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| While this article addresses generally held investment philosophies of DiMeo Schneider & Associates, L.L.C., it does not represent a specific investment recommendation for any individual client or prospective client. Please consult with your advisor, attorney and accountant, as appropriate, regarding specific advice. Information has been obtained from a variety of sources believed to be reliable but not independently verified. Past performance does not indicate future performance.
This report is intended for the exclusive use of clients or prospective clients of DiMeo Schneider & Associates, L.L.C. Content is privileged and confidential. Any dissemination or distribution is strictly prohibited.
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