Why Good Financial Planners Don’t Invade Panama

By Forbes Wilson, Intern

Interning at Carbon has been a massive learning experience for me, not only due to the insights I've gained into the real-world application of financial strategies that I previously encountered only in textbooks but also because of the opportunity to witness the importance of a positive office culture. Carbon fosters this culture through numerous organised events; on my second day, I was fortunate enough to be invited on a guided tour of the Royal Mile. One thing that particularly stood out to me from this tour was learning that Scotland once attempted to colonise Panama to gain control of the Panama Canal.

The Darien Scheme, an ambitious yet ill-fated venture undertaken by Scotland in the late 17th century, aimed to establish a colony on the Isthmus of Panama, known as the Colony of Caledonia. This endeavour was seen as a way for Scotland to gain wealth and establish itself as a significant player in global trade. Unfortunately, the plan was marred by poor planning, inadequate funding, and a lack of support from neighbouring powers. The harsh environment, resistance from local tribes, and outbreaks of disease further compounded the challenges. Ultimately, the venture ended in disaster, costing Scotland dearly in both financial resources and lives, and significantly impacting its economy. The failure of the Darien Scheme is often cited as a contributing factor to the Act of Union in 1707, which unified Scotland and England under one government.

Learning about the Darien Scheme just as I began my internship was extremely interesting. As I attended meetings with various departments within the business and gained an understanding of Carbon's unique investment strategy and philosophy, I began to draw parallels between the lessons learned from Scotland's failed colonisation and the principles of effective and strategic investment. The first major failure was poor planning. With little to no knowledge of tropical diseases, the agriculture in this new environment, and the strength of local tribes the expedition was doomed before it even set off. Another critical flaw was the lack of support and communication. The plan involved two ships: one to establish the colony and another to support and maintain it. However, the first ship suffered so many casualties from disease and conflicts with locals that it tried to return to warn the second ship not to come, but by the time it reached Scotland, the second ship had already departed. The largest flaw was Scotland's huge investment in this endeavour lacked any diversification, investing nearly half of the nation's capital into a single venture and exposing Scotland to extremely high risk.

These lessons align closely with the key principles that Carbon upholds. Such as, when creating your financial plan Carbon takes the time to fully understand you and your future financial landscape. They then work to understand what the major risks are you face in your financial future and how best to mitigate them. Communication is another cornerstone of Carbon's approach, priding itself on transparency and the support it offers clients. During my internship, I witnessed this commitment firsthand in the client support room, where staff took a personal interest in clients' lives to ensure that any recent developments didn't adversely affect their financial decisions.

Only when they have mapped out the landscape, understood the risks and importantly checked both your understanding and comfort with any proposed actions, do they agree an investment strategy of varying risk levels, each diversified across global markets, with a slight tilt towards small and value stocks to deliver above-market returns. This approach avoids the pitfall of over-concentration, akin to putting all eggs in one basket. Additionally, Carbon's investment team conducts in-depth research and reviews academic literature to ensure clients receive the best returns, investing in funds proven to outperform the market while also being cost-effective.

I believe that the lessons I've learned at Carbon will have a lasting impact on my life and career, enhancing my future endeavours, whether I pursue a path in financial advice or explore other fields.

In conclusion, when pursuing long-term financial freedom and stability... don't invade Panama! Just as the Darien Scheme teaches us about the perils of poorly planned ventures, it's crucial to approach financial planning with a careful and informed strategy. Finally, I would like to thank all the staff at Carbon for making me feel so welcome and for helping me make the most of my internship. Their willingness to answer my questions and assist me in getting to grips with the various tools and platforms used in their work was invaluable. This supportive environment has been instrumental in my learning and growth.