It’s possible to follow the best investment advice and for money to still have a net negative effect on your thoughts and your life
It’s not difficult to find adequately sane investment advice in books or blogs. The sane ones may be in the minority, but it’s a growing minority. However, knowing how to spend, save, and invest does not automatically translate into doing so in a way that improves the quality of your life. Wisdom can elude even the educated and erudite.
When the very mention of money causes arms to flail about in a frenzied bid to cast aside unwelcome thoughts like flies around shitty mental machinery, telling the owner of those arms what to do with their money does not make them do it, however clearly the steps are spelled out. It’s like telling someone on a diet to stop eating sugar. The knowledge that their body doesn’t respond at all well to sugar may work for a bit, but if they never change their belief that their sweet tooth is as much part of them as the ones made of rapidly deteriorating enamel, then the march to diabetes won’t be denied.
For example, take the traditional first step in financial planning: an emergency fund. Telling someone to build a cash fund of 3-9 months’ worth of expenditure is not going to make them do so when the reason they haven’t already is because they’re addicted to doing the opposite of saving. Would you bother telling a crack addict to stop spending money on crack and put it in a piggy bank? Other addictions may be more socially acceptable, but that can make them harder, not easier, to overcome. Next to nobody thinks they have a major problem with money. Even if the emergency fund did get built, it’s no guarantee it will stop its owner panicking when it’s time to use it. It may lessen the panic, but it doesn’t let it go.
DIAGRAM TO COME
from brain change to money change
This is where most investment advice goes wrong: it’s written for people whose brains are already in the right place to receive it. Most people’s brains are in no such place. You can’t fire a cannon from a canoe. Most investment advice rightly knows it has to combat the perceived complexity of finance, but focuses on painting prettier pictures of clarity and simplicity, forgetting that the audience still needs to go to the gallery, still needs to remove their hands from their eyes, and still needs to learn how to see what they’re looking at.
If jumping to the tactics – if stocking your cupboards with chia seeds and quinoa and signing up at a gym – were all it took to rewire a brain that’s been slovenly about everything bar stuffing its face for years, we’d all, in the immortal words of Derek Sivers, be ‘billionaires with perfect abs’.[i]
You can manage your money ‘perfectly’ and still live poorly. But if you think about money well, you’ll use it well, you’ll live well, and a lot of the managing will look after itself. This is still an investment book, and indeed all the relevant investment stuff is summarised on a single page later on. If you’re into living in a castle in the sky in the Kingdom of the Blind, skip straight there. If you prefer firmer foundations, and figure that the one-eyed man is only in charge when everyone else has their eyes closed, stay on course. Learning isn't about getting to the truth, it's about helping grasp the relevant implications.
There’s a time and a place for delegation; delegate the numbers, but keep the meaning of them under your control
There’s a reason the words ‘peace of mind’ appear on every financial adviser’s website. It’s not to distinguish them from all the firms aiming to give you a mental breakdown. It’s because when your mouth says you’re seeking advice, your mind says you’re seeking peace.
Yet peace in the abstract is a tricky concept. Without a boundary of time, it’s pretty useless. Concussion brings a type of temporary peace. Peace can be found in the early days of a Ponzi scheme. Every old-school sales manual teaches the value of creating a ‘disturbance’ just so you can take it away again in the name of ‘creating’ peace. Panic-selling grants investors a short-term peace, while reliably robbing them of the means of a longer-term version, in the vein of Tacitus’s quip that ‘they make a desert and call it peace’[ii].
So desperate are we to find it, that we attach the label ‘peace’ to anything offering a hint of temporary external calm. We substitute peace of blind for peace of mind; yet the peace we seek can come only from within. Inner peace is secure, external peace, even when ‘achieved’, is fragile. In the words of Seneca:
Peace itself will supply you with new fears. If your mind has once experienced the shocks of fright you'll no longer have any confidence even in things which are perfectly safe; once it has acquired the habit of unthinking panic, it is incapable even of attending to its own self-preservation. For it runs away from dangers instead of taking steps to avert them, and we're far more exposed to them once our backs are turned.[iii]
That was written when people walked around with swords, but it’s just as true now, when the dangers we face come from the cutting edges of accountancy. Millionaires, it turns out, are people too. And people will always find a reason to worry.
In any era, the most debilitating dangers are inventions of our imaginations. Even if we have a hunch that money messes us up, we turn away from interrogating how, fearful of what may be revealed, while clinging to the hope that if we can just corral enough cash together, ‘peace’ will find us. Those we turn to are happy to encourage this, to persuade us worries are better delegated than dissolved.
In some times and places – where the worry is attached to a time-bound event where a precise expertise is called for – this is wise. Angry people on Twitter never know better than international scientific institutions.
In one study[iv] looking at financial decision-making, it was shown that when given the advice of an expert, people turn off the bit of their brain that thinks for themselves. In the words of the paper’s first author: ‘there occurred an offloading of the decision-making process in the presence of expert advice.’[v] ‘The problem with this tendency,’ noted the research team’s leader, ‘is that it can work to a person's detriment if the trusted source turns out to be incompetent or corrupt.’ Which makes this a huge problem in financial advice, because, as per the title of Part 4, Chapter 2, ‘(Almost) all financial advisers are crooks or idiots’.
This problem would be lessened if financial advice were time-bound and centred on expert application of technical skills. A bit of it is. But most of it is not. This Part of the book is about explaining that how your money affects the goodness of your life is an ever-evolving relationship you participate in, not a series of decisions to be made by a mythical robotic version of you that is capable of stepping away from emotional involvement every time it picks up a calculator.
The hallmark of rationality is to focus on the process, not the product. Rationality isn’t logic. It isn’t not feeling. As above, emotions are an input into the prediction machinery of your brain. ‘Being rational means knowing when, where, and to what extent to be logical’[vi]. In terms of turning your resources into your Good Life, this is a process of defining your identity in relation to and in interaction with, your environment. You’re doing this all the time, mostly unconsciously. Because money decisions have such a powerful effect on this co-identification process, we need to pay great attention to this process: we need to turn our brains up, not off, lest we be sucked into an abyss of self-deception and self-destruction.
When someone’s spent their life selling hammers, it’s hard to stop seeing the nails just because they’re not there. As we’ll see later, investment advice still operates from a profoundly product-selling position. Even when the UK banned commission, it changed only the label applied to a fee based on the amount invested in a product (from commission to ‘adviser charge’); it did not change the mindset of the salesman, or by extension the nature of the industry that mindset had created.
We forget how emotional money is, so we don't change. As French philosopher-monk Matthieu Ricard explains, ‘When we emerge from that moment of blindness during which we are completely in the grip of a strong emotion, and our mind has been freed from its disruptive emotional burden, it is hard to believe that an emotion had dominated us to such an extent.’[vii]
While most advice is happy to pretend that feelings are so fleeting as to be ignorable, some more modern advice does at least nod towards the non-number stuff. However, even then, it’s burdened by the blinkered grammar of the past from which it is only slowly evolving. One of the pioneers of the move in the right direction set out ‘the five aspects of financial wellbeing’ as follows:[viii]
1. A clear path to identifiable objectives
2. Control of daily finances
3. Having financial options in life
4. Preparing for financial shocks
5. Clarity and security for those we leave behind
This is all important. But every one is focused on the numbers. And every one is geared towards a product of some form as the solution. The intentions of the movement are superb. But the understanding of how to achieve them is sadly a bit off.
Delegation is often most tempting where it’s most ill-advised. Resisting the persuasive promises of ‘peace’ isn’t easy. But making zero effort as anything other than a side-effect of a healthy habit is always a false economy.
The difference between pain and discomfort is how you feel afterwards. Discomfort makes you grow, pain makes you break. Much long-term money pain is a direct result of avoiding short-term money discomfort. Adding extra padding to a support a poor position doesn’t improve your posture, it accelerates its decline. Not making the short-term effort required to level-up your long-term quality of living leads to pain.
None of the prescriptions in this book is hard, but they’re all immediately harder than doing nothing. To carve out your personal Good Life may be natural, but it’s not going to happen by accident. Because the world isn’t you. That’s sort of the point of you. Like the difference between practice and deliberate practice, conscious action and addicted action, you can go through the motions of the turning world, or you can turn yourself.
 This isn’t to say the step-by-step approach cannot work as a kick-start to making change where it really counts. It can. But that’s never how it’s sold.
 We’ll look at the specifics of how much is right for you in Part Four/at the very end (tbc).
 The motivated person that goes to bed dreaming of sticking to their new routine may think that the person who wakes up in their place is the same person and will need no extra motivation. This is never true.
 If, beyond that, you would rather have a life beset by existential angst before becoming the richest chap in the cemetery, this is not the book for you. Nothing’s the book for you. Stop wasting your time reading and go out and make more money. Make stuff people want, and make it well or sell it well. You’re welcome to come back when you’ve ‘succeeded’ only to find out you didn’t.
 Be careful not to hypercorrect. Pointing out that investment advice is mostly bullshit does not mean it’s all bullshit, or that finding the non-bullshit bits is impossible, and therefore an excuse for not even trying. We’ll see how to demand the good stuff in Part 4.
 We’ll revisit this in the next chapter, when we look at the crucial differentiation between different types of knowing.
 In order, and in the context of the article and the author’s book: a financial plan, a budget, cash-flow modelling exercise tied to an advised portfolio, insurance, the organisational aspect of a financial-planning service.
 If they weren’t, there’d be no need to write about them, for they’d be the default action.
[i] Derek Sivers on the Tim Ferriss podcast
[ii] Calgacus' ‘Speech to his Troops’ in Tacitus, Agricola
[iii] Seneca, Moral Letters
[iv] Emory University of School of Medicine, ‘Expert Financial Advice Neurobiologically “Offloads” Financial Decision-Making under Risk’ Jan B. Engelmann,C. Monica Capra,Charles Noussair,Gregory S. Berns, March 24, 2009
[v] Jan B. Engelmann, Emory University news release
[vi] John Vervaeke, Awakening from the Meaning Crisis, ep. 27
[vii] Matthieu Ricard, Happiness
[viii] Chris Budd, quoted in Money Marketing