Talk Me Out of This!

July, 2023

Most who know me understand that I’m a voracious reader. And of course, I also like to write. In my book Castles & Moats, I spend a fair amount of time talking about the very real battle between emotion and logic. If you own the book, you can find this in Chapter 25.

Surrounding this, I have a couple of thoughts to share. First, Albert Einstein said, “No problem can be solved from the same level of consciousness that created it.” Second, when emotion and logic butt heads, emotion always wins. The latter phrase is supported by a 2002 Nobel Prize in Economics won by Daniel Kahneman, a psychologist by trade. At the time, the notion was groundbreaking, but today it’s widely discussed and is referred to as “behavioral economics.”

What prompted this month’s blog was an article I read that explored why clients should consider working with a financial advisor. For me, the answer is pretty simple. In my mind, Tiger Woods is the greatest golfer of all time, but even he has a coach. In fact, he’s had several different ones over the years. Michael Jordan was an incredible basketball player, but you also have to give credit to his coach during his championship years, Phil Jackson. Heck, even Ted Lasso finally admitted to himself that he needed help from the team psychologist, Dr. Sharon. (By the way, if you haven’t watched this three-year series on Apple TV, you’re really missing out!)

I often tell my friends that I make “well thought out, impulse decisions.” For example, it took me all of 45 minutes (and some amazing coincidences) to purchase my home ten years ago. As for my cars, surely less time than that. And rarely is anyone there to talk me out it. I admit that my iPad is my downfall, mostly because most of the time it sits on a table right beside me. I make most of my online purchases with this device and occasionally will do some online surfing and window shopping just for the heck of it.

When it comes to cars, I’m very brand loyal to Acura. I think I’ve owned eight over the last 30 years. My most recent one, I found while looking on their website four years ago. It was a program car, which had about 4000 miles on it, and it was insanely discounted from the sticker price. So I called Mike, my go-to guy at the dealership, who gave me all the details and said that if I wanted it, I had better come and get it. I told him to put the deal we discussed on paper and I would visit him at the dealership on Saturday.

What made little sense about this decision was the fact that my current car at the time was in perfectly good condition and completely paid for. What was I thinking? So I called one of my best friends, a car aficionado and self-professed gear head. I told him about the car, explained that I was thinking about buying it, and finally said, “talk me out of this!” It’s not that I really wanted to be talked out of it; I just needed some reassurance from a logically minded friend that this somewhat emotional purchase actually made sense.

So my friend went through his routine of questions” “Do you have a country club membership?” No. “Do you have a boat.” No. “Do you have any extemporaneous expenses such as alimony or child support?” No and no. “Are you done buying guitars?” Yes. “Short of travel, have you done something really nice for yourself lately?” No. And that’s when he said very strongly, “So go buy the darn thing!”

The point is that it was nice to have someone to turn to in order to help make my decision. The whole conversation took maybe ten minutes, but it made me feel less emotional and more logical about this otherwise impulse purchase. And I’m glad I bought the car, because it’s also is a lot of fun to drive!

Here are a couple more real-life stories. Last year, I met with someone in possession of retirement dollars and inheritance dollars that wanted some advice. She told me that she was barely getting by on the interest of one account and were scared to make any decisions to spend additional dollars. In this case, it was a trip she wanted to take. It was clear to me that her emotions were keeping her from enjoying her life, that her fears of spending today and not having enough for later in her life were causing these emotional dilemmas. Does this sound familiar to you?

I told her that I have had several clients that were “children of the Great Depression,” and because of the memories of tough times, they never allowed themselves to enjoy those hard-earned dollars. I remember sitting at lunch and asking one of them what his plans were for using those accounts and his answer was that he was leaving it to his grandchildren.

So I asked him if which of the following would be more enjoyable: to be able to give some of those dollars to the grandchildren now, in order to witness the joy of the gift while living OR simply wait until they were gone and leave it as an inheritance? He thought for a moment and smiled, a confirmation that my question really hit home. All I did was give him permission to make those gifts now rather than later, and nothing more. But it was exactly what he needed.

With those thoughts, let’s return to the previous conversation with my friend whose fears about spending her money were preventing her from enjoying life. This was nothing but emotions and although I didn’t solve any problems that day, I took a lot of her information back to my office, laid it out as a “present plan” and began to create a series of financial strategies that built certainty into her “future plan.” Acting as her advisor, I created several lifetime income solutions that gave her permission to spend, with the comfort in knowing she would not outlive those accounts. And when I factored in her Social Security benefits, it resulted in a monthly income that was almost 80% of the salary she experienced during her working years.

In this case, just like when I bought my car, logic trumped emotion. By offering the reassurance she needed to enter into the distribution phase of her life, she is now winning the game of life by enjoying her income in retirement and not being fearful of spending. Obviously, the results vary from client to client, but does this story resonate with you?

Solutions with certainty and guarantees are what I create for my clients. My role as your advisor is to exploit every legal and ethical means necessary to accomplish that goal. If you’ve read this far, clic the FREE CONSULTATION button on my website and let’s get started. I look forward to hearing from you!

Many thanks,

Brian

**Examples are intended for illustrative purposes only and may be not indicative of your situation. Individual results may vary.