2.2.2.4 Right place, wrong mime
Despite being in the best place to see the trouble of doing so, Advisers encourage living (and buying) the dream, not realising a life
The road to hedonistic hell is paved with good intentions
A prospective client came in one day; let’s call him Richard. Richard, being sensible, was shopping around before entrusting the several million he’d pocketed from selling his company to relative strangers.[1]
In the spirit of pitting the competition against each other, Richard told of how in his last such meeting, the adviser had already offered to put him in touch with his ‘car guy’, who could get him a special rich-person deal on a fancy new marque. What did we think? What was a better car? Bentley, Ferrari? Aston Martin?
‘I thought you were more of a motorbike guy.’
Richard was a motorbike guy. Part of the reason he didn’t know which car he wanted was because he didn’t want any of them. But a fire started by society and doused in petrol by the previous adviser had burnt down Richard’s reasoning. He was rich now. And rich people owned flashy cars. Right? In the kingdom of the money blind, ‘which flashy car?’ replaces ‘what use of this money is most likely to make your life better?’ and the world goes up in smoke.
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Advisers are in the perfect position to stop people wasting resources on stuff that won’t improve their lives, but which societal sirens say is a good idea. As noted before, advisers are not only in the position to take an outside view[2] but also get to see, from inside the heads of those that have tried, all the tempting but dumb ways allocating resources doesn’t work; they are the conduit by which people can learn from others’ mistakes. As an added bonus, they also have a better understanding than anyone else of when running out of money is actually likely, rather than a phantom that keeps people from fulfilling more of their potential.
However, we’ve also seen that because most advisers act like co-authors of life stories rather than editors – for example projecting their car guys onto motorbike-lovers, or, in the name of short-term client comfort, justifying dumb decisions rather than challenging them – clients’ psychological screams fall on deaf ears and mistakes aren’t learnt from, but multiplied.
Being in the most privileged position isn’t much good if you do only an imitation of the job the privilege affords. Advisers may be in the best position to help, but through both nature and nurture, they are often the worst people to actually do so; more enablers than trainers.
Nature
‘All too often the mere hope of money has ruined many men.’[i] So said Creon, in Sophocles’ Antigone. Financial advisers are often both the most obsessed with money, and the most prone to self-deceptive beliefs about it. They are more likely than their clients to be lured into error by misguided dreams of ‘more’, rendering them incapable of helping, despite being paid to do so. They’re experts at showing clients what they’re looking for, not helping them to see what they want.
We’ll look at the history of financial advice in more detail in Part Four. For now, just know that most advisers become advisers to make money, not to help people use it more wisely.[3] The industry has moved on a lot from its Wild West origins, but switching from spurs and a Stetson to a suit does not automatically stop someone being a cowboy.
Anyone giving advice in any arena is more often doing so to justify their own life choices than to help whomever they’re advising improve theirs. The only difference with financial advice is the consequences – by virtue of that advice being about how to allocate one’s resources in the name of living a Good Life – can be that bit more catastrophic.[4]
Financial advisers are often the most prone to self-deceptive beliefs about money. They pride themselves on giving people permission to spend their money (within reason, as we’ll come to in a second). This can be good. Worrying you don’t have enough is just as pernicious as spending it simply because you can. But both are characterised by the sort of blindness we know detracts from a Good Life, not adds to it; both are behaviours of minds stuck in having mode.
Financial advisers may be best placed to see that value lies in a focus on narrative not numbers, but numbers are their comfort zone. Their job – or so they have come to believe – is about knowing numbers in a propositional and procedural way better than anyone else. Yet it is the perspectival and participatory knowing that people most need help with.
Financial advisers do want to help. But as is all-too-often the way with self-appointed helpers, they’re quicker to jump to tactics than to they are to stop and think through the consequences of their prescriptions. As per the earlier section on what other investment books miss,[5] this is true even with those that focus on ‘financial wellbeing’. Having a heart in the right place matters, but incentives matter more. And financial-adviser incentives are not where you want them to be.
Nurture
Let us return to Creon…
You'll have learned, at last, it doesn't pay to itch for rewards from every hand that beckons. Filthy profits wreck most men, you'll see – they'll never save your life.[ii]
Adviser incentives matter in two ways: to sustain themselves, and to sustain the system.
We’ll return to the system in Part Four. Sustaining themselves relies upon backing up the belief that more is better. The vast majority of financial advisers literally earn their living on the back of this belief, given that the fee they receive for their services is based upon how much of their client’s money they manage. Their raison d’être is to make their client more money. Most salivate over high salaries, and high lives. Talk of meaning is more often a sales pitch than a serious undertaking; especially when the adviser’s fee would collapse if the most meaningful thing for a client to do were to cash in some chips.
When advisers talk of realising dreams, they do not mean in the sense of ‘making real’ in the way a potential-fulfilling flourishing human would understand. They do not mean cultivating a real relationship between a person and their money that transcends and brings relevance to both. They mean replacing all thought of reality with a chase after an ultimately unrealisable dream.
While advisers don’t necessarily encourage buying stuff (if anything, because of the prevalence of percentage-based fees, they’re incentivised to do the opposite, in the short-term), they do encourage continuing to play a stuff-centric game, where stuff is the symbol of ‘success’. They encourage buying the amorphous dream sold by the lie that more is always better. They claim – sometimes even consciously – that the perfect financial plan, the mark of a life as well lived as possible, consists in spending your last penny just before you die, as if consumption, regardless of consciousness, equals quality.
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[1] It’s a sign of how scared people are around money that so few do this, instead making their decision based on an hour or two with someone who has been trained specifically to sell you their services, not help you get comfortable with the complexity of your life… a complexity that those few hours won’t get close to grasping.
[3] This is mostly unconscious. Few would admit it. But as we’ll see in Part Four, common advisory actions, from the structure of their businesses to the content of their client meetings, provide irrefutable evidence.
[4] Depending on your benchmark, the consequences of even crap advice can be ‘good’. Even the cowboys will make people more money compared to sitting in cash. But that’s not really the point. It sells both the owner of the assets and the world in general far too short.
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[i] Sophocles, Antigone
[ii] Sophocles, Antigone
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