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Seniority Rules

Steve Lofgren

Director of Financial Education

Last Updated
March 14, 2022

Why Pilots Shouldn’t Delay Financial Planning

While those of us in the airlines may not always see eye to eye, we all acknowledge one hard truth: Seniority rules. Your entire life at the airline is dictated by your date of hire. It doesn’t matter if you’re the best pilot at the company or the worst — you won’t become a captain or be able to bid the base and equipment you desire until your seniority allows it. When furloughs happen, being hired even one day prior to your buddy could mean the difference in who is let go.

When I interviewed at my legacy airline, so did my buddy “Larry” (not his real name). Larry and I worked at the same regional and interviewed at our legacy on the same day. We were hired together and initially assigned the same class date. But, unlike Larry, I did one small thing that proved to be HUGE down the road: When I was assigned our original class date, I called the pilot hiring department and told them I was flexible and willing to come early if needed. They thanked me and said they would keep me in mind.

As fate would have it, they called me when a pilot in the class one week before mine had a military obligation he couldn’t get out of; I was told if I was still flexible, I could fill his spot. Of course I jumped at the opportunity! My buddy Larry wasn’t happy I was ditching him, but I knew seniority was everything. Fast forward a year or two, and Larry and I were flying the Airbus at the same base. While we were only about 10 numbers apart, I was just barely able to hold a line while Larry was just barely on reserve. The bottom line? In that year I made significantly more money as a line holder than Larry did on reserve. Seniority rules.

The same principle holds true for investing and working with a fiduciary wealth manager: Every day matters. If you are dragging your feet on getting your finances and wealth management plans in place, it can cost you down the road (potentially much more than it did Larry). There are so many reasons it makes sense to take action today that I can’t possibly list them all, but here are a few big ones:

Compound returns

Albert Einstein said compound interest is the eighth wonder of the world. Interest upon interest building up over time. A lot of people like to cite Warren Buffet as the best investor of all time, which I believe he is. But he will be the first to tell you that he didn’t get to where he is by picking the best stocks — he did it using the compound returns those stocks paid him. In the stock game, think of Buffet as seniority number one. Every day you are not invested in quality securities is a day you’re losing out on compound returns. Listen to Albert and Uncle Warren.

Unexpected life problems

There’s a misconception that bad things only happen to folks later in life. Yet the misfortune of an untimely death or incapacitating accident, while rare, can be absolutely catastrophic to your family’s finances if you aren’t prepared. Unless you have a solid plan in place, it’s too late to act once you are sick, hurt, or worse. It may sound blunt, but putting your head in the sand and hoping bad things won’t happen isn’t a strategy.

You may think of a wealth manager as someone who can potentially help you maximize the returns in your 401(k) plan, but a good advisor can actually help you manage your entire financial life. The simple act of working with a professional to put your wishes down on paper can potentially mean the difference between comfort and catastrophe if the situations you think “will never happen” do occur. Waiting even one day longer than you absolutely must before getting your estate plan in place could be the worst mistake you ever make. Proper planning is like getting your application done for your legacy airline — every day you wait costs you in seniority.

My buddy Larry and I are both Airbus captains now, and we laugh about what happened in the past and how my one phone call made such a huge difference for me. But both of us are reminded daily that waiting to take action can be a very costly mistake. Being prepared for life’s unexpected problems isn’t something to procrastinate on. Just as every day matters in terms of your seniority number, every day also matters in terms of financial planning. Whether at the airline or in finance, seniority rules.

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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