F. Scott Fitzgerald, Financial PlannerSubmitted by WWA Planning & Investments on October 23rd, 2019
All investors recognize the need for information. In fact, some become almost obsessive about it, spending a considerable amount of time in a quest for the one crucial insight they can use to unlock financial success.
Although numerous subscription services offer their secret formulas, consider this: If the writers could truly outperform the market, don’t you suppose they would have done so by now, then retired rich? No, while I’m certain that many of them have unique voices, I doubt if any of them truly has “the answer”. Still, hope springs eternal and a lot of time is spent picking through the thousands of choices, searching for that gold nugget hidden within the tailings.
With so many choices, how do investors ultimately settle on one? They often begin with a quick sort, discarding those with whom they generally disagree, then choosing among those which remain. This is an example of confirmation bias, the very human tendency to focus on information that reinforces already-held beliefs. For example, many people with a conservative bent choose Fox as their news source. Likewise, MSNBC viewers are generally seeking a more liberal viewpoint. Both camps find what they’re looking for, rarely hearing a contrary opinion. In fact, confirmation bias is the foundation on which the world of punditry is built. Rush Limbaugh and others provide commentary pre-edited to align with their world views. If you see the world as they do, you’ll love their programs. If not, well, they’re just plain wrong.
According to research done by consultant and TED speaker Valdis Krebs, Amazon shoppers rarely buy books which challenge their notions of how things should be. The link takes you to a case study which reports that during the 2008 election season, people who already supported Barack Obama bought books which portrayed him positively and people who disliked him did the opposite.
I’ve written before about the importance of psychology in financial planning. How people feel about their life and money is often of more day-to-day importance than their money itself. To balance our clients’ selectivity about their news sources, I try to seek out a wider range for myself. I believe I need to look well beyond the investment headlines in order to do financial planning effectively.
I begin by staying current with my industry, reading several journals specific to it. To save time, I subscribe to a service which categorizes and summarizes articles from Financial Advisor, Financial Planning, Institutional Investor, Investment Advisor, Journal of the Certified Financial Planning Association and Wealth Manager. I also read the quarterly Journal of Indexes (putting to rest forever the question of whether Indices is the correct pluralization).
Our clients’ lives are impacted by many different businesses, so I try to keep up with that world too. For general information, I read Fortune (described in the movie Wall Street as The Bible), Businessweek and, for a more global perspective, the Economist. To maintain balance, I read the Wall Street Journal every day (and have for over 35 years) and a headline summary from the New York Times. I read Forbes and the Atlantic for the same reason – to make sure I get both sides of the story.
For a longer term perspective, I read both the (somewhat liberal) Harvard Business Review and the (definitely conservative) City magazine from the Manhattan Institute quarterly. Finally, I read a couple of books every month, generally dealing with psychology or decision making. None of this ensures that I’ll have the right answer to any specific question but, over the years, I’ve been asked about a pretty wide range of topics so I try to be prepared for whatever may come along.
In past articles, I’ve suggested that TV character Pa Cartwright, 19th century economist Vilfredo Pareto and my mother might have made good financial planners. Today’s candidate, F. Scott Fitzgerald, was a prolific writer and well known in his time for living his life in the headlines. I propose him because of this quote from an article he wrote: The sign of a first-rate intelligence is the ability to hold two opposing ideas in the mind at the same time and still retain the ability to function. This sentence appeared in Esquire, a publication that’s no longer on my reading list.
I’m not certain I can rightfully claim to be the possessor of a first rate intelligence but I never stop trying to learn and always try to consider all sides of an issue before offering advice to my clients. I suspect Fitzgerald would have made a good planner precisely because, while he had a wide range of interests, he was quite capable of making pragmatic decisions when necessary. That’s a working definition of the role of a financial planner.