Lessons Learned About People and Money in My First Decade As a Financial Advisor

In late 2010 I passed the Series 66 exam, which is a requirement for the business of financial advice. My dad told me early on though, that an advisor is much closer to a therapist than anything else. A decade-plus later, he’s been right on. We’ve had our fair share of therapy sessions with clients.

You learn more about human nature than you’ve ever dreamed when studying securities laws from the 1940s: 

Some People Want Advice, Others Just Want Permission 

Some people ask you a question but build an argument that loads up the answer they want. The phrase “I know ______, but I feel like _____” is a total giveaway.

Objective responses are welcome, only if you agree 😊.

When emotions bump reason into the passenger seat and begin driving… get out of the way! Because: 

We’re All A Bit Crazy: People Spend Money On What They Want 

I had a friend in college we’ll call “Dan”. Dan would literally borrow money to eat at the end of the month, but also had a Nike shoe habit… The brand new release kind. We didn’t understand the tradeoff…but he looked really stylish when asking to use someone’s meal plan.  

On the flip side, I would shop clothes only from clearance racks at Macy’s but happily buy three $14 beers at a ballgame.

Everyone’s priorities are different. 

Money Brings Out The Absolute Best And Worst In Families  

Neither Generosity nor Greed is bound to any demographic or tax bracket. In many ways, money is a litmus test of character.

Your Position Determines Your Position 

Wanna know if someone owns Tesla, Bitcoin, or any other asset that’s up 10-fold? Ask them how they feel about it. Their answer will tell you whether they own it (or are jealous they missed out). Something deep in the mind makes it hard for our ego to accept when we’re wrong.

Investments don’t feel that “crazy” if your clarity is blurred by easy money.

Likewise, missing out on a 10x gain leads you to believe the bubble is ready to pop, and you’re smart to stay away. 

Money Is Always Top Of Mind 

Change is a scary thing.

On top of that, life change always means money change. Because nobody wants to feel like they made a mistake by not considering the money, they address that aspect early in the process. There are times our office has been the very first call after a big change, which goes something like: 

“We’re pregnant!... How do we start saving for college?”  

Or 

“My spouse passed away… I’m overwhelmed with this stuff, can we meet?” 

Or 

“I got laid off… What do I do with this retirement account?” 

For better or worse, people’s lives and finances are intimately woven together. 

Sometimes Behavior Anchors Beliefs

We’ve all probably heard the same good advice through our lives, like “spend less than you make” and “invest for the long run”. But the beliefs we anchor onto are those beliefs that support our behavior. 

“My dad said he did well avoiding the stock market, so I will too”

“My uncle got rich on this stock, so I will too” 

“My friend got rich on real estate, so I will too” 

It’s incredibly difficult to be open-minded about investing when you have both a comfort level and network influence telling you otherwise.  

Time and Happiness 

Everybody knows about compounding. The more time you have, the more your money can grow. That’s not what I want to talk about: 

Control of your time is one of the biggest indicators of happiness we see in people. Some people hate what they do 20 hours a week, other love what they do 60 hours a week. Who do you think is happier?

Retiring isn’t just about if you have enough, but if you’ve had enough

Retiring from a tough job to do more things you love = usually a good choice.  

Retiring from a great job without anything to look forward to = usually a bad choice.  

Trading money for more time, in several circumstances, is a good trade: Queen Elizabeth I’s final words indicated she would trade “All my possessions for a moment of time”. 

People’s Views On The Stock Market Reflect Their Views Of The World 

This was never more evident than the beginning of the CoronaVirus pandemic. Stocks dropped 35% and the optimistic clients bought shares with both hands… While self-identified pessimists could barely hang onto what they had. We learned a lot about each other in those conversations.

A person's beliefs about money are a dense middle ground between current circumstances and future ideas. If you don’t believe that the world will gradually improve, you’re going to have a tough time holding stocks when things get muddy.