Recently, i had the opportunity to conduct a daylong workshop for a delegation from a bank in China. The delegates were keenly interested in how the wealth-management industry in Canada works and, in particular, how Canadian financial advisors interact with their clients. So, I talked about the two roles of an advisor: to educate clients about the principles of sound investing; and to help clients choose the products most appropriate to their needs.
On the topic of education, I demonstrated how advisors work to help their clients understand such essential ideas as the value of regular saving and managing debt, keeping a long-term perspective on investing and coping with risk through proper asset allocation. Although I was using some nifty wealth-management software from a Canadian firm that has a Chinese-language version to illustrate these propositions, my audience seemed only mildly interested. I chalked up their modest enthusiasm for the importance of these concepts to being “lost in translation” despite the presence of a first-rate translator.
After reading Michael Justin Lee’s The Chinese Way to Wealth and Prosperity, however, I now know that not only are these concepts familiar to my guests, they have been ingrained in the Chinese culture for thousands of years and are accepted as given, so there is considerably less need to educate clients on the virtues of these concepts.
Each of the “8 Timeless Strategies for Achieving Financial Success” gets its own chapter, and the descriptions below do not do justice to the treatment of each by the author. Perhaps that’s because the majority of the strategies deal with the creation of human capital – which ultimately will be converted into financial capital – which is a more compelling topic, in my view, than simple investment advice. For example:
– learn, then earn. Education is the cornerstone of the pursuit of prosperity. If you master your profession or trade, you will rise to the top and enjoy the economic benefits that come from achieving the highest levels of success.
– get mobile and go global. People with the courage to step outside their own backyard (or homeland) and leave everything comfortable behind often have what it takes to take advantage of opportunities others don’t, or won’t, pursue.
– make connections and return favours. We’ve all heard that in business, “it’s not what you know; it’s who you know.” Nowhere is that better demonstrated than in the Chinese notion of guanxi, which refers to a network of personal relationships that are bonded together by the reciprocal exchange of favours.
– reduce debt and release your capital. Consider money employed to pay down debt as an investment in yourself and a repurchase of your human capital. You are buying back your freedom.
– defer gratification. Institute values as a topic of conversation at the dinner table. In today’s “now” society, the will and willingness of past generations to save for the future are lessons we need to revive and pass along to future generations.
– avoid unrewarded risks. The author notes reluctantly in his chapter entitled “Do Not as the Chinese Do” that gambling is rampant in Chinese communities and is a barrier to prosperity. Lee views gambling as a tax, not only on the finances of the gamblers but also on their souls.
Regarding specific financial advice, the book contains these familiar concepts:
– play financial defence. Invest early in life, and often, to allow compounding of returns to work on your behalf. Also look for opportunities to use corporate or government programs to supplement your own investments. And take advantage of the tax rules to maximize net returns.
– love the land. The benefits of investing in real estate go beyond financial returns, particularly when it comes to ownership of our homes. We also gain a sense of pride and a strengthening of our resolve to keep our family safe and together.
Lee, who teaches finance at George Mason University in Virginia and the University of Maryland, goes well beyond a simple description of these principles. He provides context and history lessons to help us better understand both the logic and the motivation that has made these concepts part of Chinese culture. He acknowledges that many other cultures have similar beliefs. But, in his view, few peoples have endured adversity the way the Chinese have and still been able to adhere to principles established thousands of years ago.
I very much enjoyed this book, not only for the way it is written and the content but also for the reminder that the road to prosperity need not be complicated if we follow such straightforward, time-tested lessons.
The Chinese Way to Wealth and Prosperity: 8 Timeless Strategies for Achieving Financial Success
by Michael Justin Lee, McGraw Hill; 198 pages, $18.20
*** 1/2
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