2.2.3.4: Selling style over substance
Advisers, being humans, also tend to overweight price and overlook value

Welcome to Price World, population: nearly everyone

Advisers are in the best place, but the worst position, to help improve your relationship with money
If you ever meet a financial adviser, ask them who their best client is. Almost every single one will tell you not the client they get on best with, nor the one with the most interesting challenges to solve, but the one that pays them the biggest fee. They may use ‘favourite’ for the one that brings them the most all-round joy, but they reserve ‘best’ for the money.
As we’ll see in Part Four, this is partly because the typical advisory charging model dictates that ultimately the ‘client’ in the adviser-client relationship is not with a human, but with the money that human has. More generally, it is because advisers, as we’ve already seen in numerous places, are the most prone to the monetary self-deceptions that plague us all. Not only do they live in Price World, they’re Guardians of it.
I argue throughout this book that financial advisers are in the best (physical) place to help us improve our relationships with money, but are in the worst (mental) position to do so. They are automatically placed to provide an outside view of transactions and mindsets. To share the stories of what worked and what didn’t (in a wide narrative, rather than a narrow numbers, sense) for others in similar positions. To help us focus on long-term alignment in the face of the addictive tendencies of short-term accumulation. To coach the consciousness of our choices. Sometimes even to save us from our own idiotic insistence by restricting the release of funds that are heading straight for the furnace.
However, for reasons we’ll explore in detail in Part Four, this almost never happens. In fact, the opposite often does. The poor philosophical position of most advisers is a dense web woven of the history of the industry and the type of characters it was set-up to attract. It is expressed in the questions typical advisers ask, the reports they present, and – of course – how the whole circus is paid for. We’ll get to all of that later.
What unites it all is that financial advice has long been an industry built on selling certainty. It’s an industry that saw scared humans’ desperate grasping for ‘financial security’[1] and exploited the shit out of it. It saw a bunch of people that wanted an ‘answer’ and were willing to pay anything for it, and gave them a means of doing so. It even made it look ‘free’, despite being the biggest expense of most people’s lives.
It found itself in the perfect place to take the time to explain to people that price tags were an irrelevant symbol of an unwinnable game, but because the people in that place had dollar signs for eyeballs, they could see only the chance to coach people to keep playing. The industry didn’t make the rules of this game, but it guards them like its life depends on it… because of course in its current form it absolutely does.
The industry could focus on value. It often uses the word. But it’s so caught up in calculations, it doesn’t seem to understand what it means. A typical client’s ‘I want this’ isn’t met with a friendly, life-affirming check that they really do, rather than simply believe they do, but a jumping to whether they can ‘afford’ it – in the narrow-minded monetary sense. It doesn’t encourage an examination of the opportunity costs of the trade, and whether there are good grounds for thinking it’ll make life sustainably better; it says instead ‘Go for it! Let me put you in touch with my car/yacht/mansion guy! Associate me with this having-inspired spike in short-term feelings’, safe in the knowledge that when it’s been adapted to, no blame will be acknowledged, let alone assigned, for what could have been won instead.

Waste management

If you want help turning money into life, don’t ask for advice from people that specialise in turning life into money

To want money to not have to think about money is mad

One of the main motivations for making a ton of money is to not have to think about money. This is moronic. Because failing to think about money is a guaranteed way to waste it.
Were you to build an industry around people’s desperate grasping for existential certainty, it would look a lot like the market for typical financial advice. We’ll go into this in more detail in Part Four. For now, recall from the Introduction, our self-deceptive and self-destructive, but by no means unimportant or unreal, flicking between a fixation on fixity and a dash towards distraction. You can’t really blame the industry for pandering to these rather than challenging them. Because fixation and distraction are easier to sell, the people selling them are as fixated and distracted as anyone, and preaching about others’ moral stances is more likely to backfire than benefit anyone.
It would therefore be silly to get cross about this. Fortunes have been made and crimes have been committed in the name of giving people what they believe they want, from exploitative scams to Dan Brown novels. Here is not the place to criticise either. But it is the place to try to see more clearly what leads us, not to be exploited, but to the position where we’re so prone to be so – to the extent of paying enormous sums for the privilege.
Life, of course, is impermanent. No amount of wishing harder or buying snake-oil stops that being true. What we do when we buy advice that tells us we can pretend otherwise is we remove the human – the reality – from the equation, so we can ‘solve’ it.
The manifestations of this can be subtle, especially as the typical adviser’s promotional material proudly proclaims their service is centred on you, the human. One practical example is use of the word ‘afford’.

Affording idiocy

People are wont to use ‘because I can afford it’ as the justification for any purchase. Advisers are wont to pride themselves on telling clients they can ‘afford’ something, thus opening them up to experiences that enhance the quality of their lives. People, even those with millions, are often so fearful of running out of money, that they deny themselves things, even when they’re pretty darn sure those things will make their lives better. These ‘things’ could be material goods, or quitting a crappy job that someone continues to go to only because of the high salary. This is a valuable service. However, it’s also fraught with danger. Because more often than not, to hear ‘because I [or you] can afford it’ is to hear somebody choose becoming dumber over becoming wiser.
The ability to afford something is not a valid input into a decision-making process. If a purchase needs to be ‘justified’ by how small a dent it would make in your bank account, that’s probably a sign that you’re being influenced by something not entirely wise.
'Because I can’t afford it' can be a valid input. You can consciously conclude that something would add value to your life, but if it put a greater source of value in jeopardy, it’d still be dumb. The ratio of the monetary cost of something to the cash in your bank account is relevant only to rule something out, not to rule it in.
Where an adviser persuading a client they can afford something is helpful, what’s being said is not: ‘So what, you can afford it’, but: ‘You believe you can’t afford this thing which you’ve consciously determined will very likely make your life better, and I am providing evidence to dispel that erroneous belief.’ The first isn’t dispelling a false belief, it’s enforcing different ones – that more is always better, and that if something is expensive, it must be worth having, no life-examination required.
Commonly, having cash to cover a cost shuts down our decision-making machinery. Lack of thought leads not to transforming our resources into a Good Life, but into wasting them on white sofas and publicising our insecurities.
Every expenditure is a sacrifice of an opportunity to level-up your life, so if you’re not levelling-up or learning, you’re pissing away potential. Going into ‘fuck-it’ mode and buying something because you can is simpler than contemplating the money, time, and energy spent, and the foregone everything else you could’ve spent it on, but ‘fuck-it’ mode is fucking stupid. Because it forgets the only thing that’s important: whether something will add to your life, rather than detract (or distract) from it.
This is an all-too-common problem – of both making money and spending it on stuff to justify the sacrifices made to make it.
To pursue money so you don’t have to think about it is to believe that being able to spend blindly without going broke is a better aim than using your money to improve your life. And it’s to believe that the value of money to your life is about ability, rather than responsibility.
How you spend your money is an expression of the thoughts that shape who you are. To delegate those thoughts is to surrender your resources, to live someone else’s life, while wasting your own. Aiming for unconsciousness is an unwise way to ‘live’.
Having more money expands the universe of what you can do with it. But this is a burden, not a benefit if you have no sodding clue how to use it well to start with. If financial planning taught me anything, it’s that people are phenomenally bad at using money to level-up their lives. The only difference with the rich is that they prove it in more publicly hilarious ways.

Rich pickings

There is a pervasive belief that being rich somehow excuses you from the reality that if you don’t spend your resources with care, you’ve left the Goodness of your life up to luck rather than judgment. Don’t worry about what you want! Buy everything, and you’ll have it covered!
Yet the contrary has to be true. Because we do not live limitless lives. And when we’re stuck in the having mode, piling up stuff is likely to get in the way of the meaningful experiences that we are ultimately buying that stuff for. Recall how the ownership fallacy leads people to privatise the experiences they enjoy, despite a large part of the enjoyment coming from their public nature.
Those with the most ability to turn resources into a Good Life have the most responsibility to do so. They provide the biggest opportunity for leveraging the value of better decisions.
In some ways, the rich even have it harder… not only are there more things they could’ve done with the money instead (so if you don’t start from understanding what you really want, you only end up getting more and more distracted from ever finding out) but if you attribute value expectations to price tags, then you’re more likely to be disappointed (‘I paid X for this, so it better be good’).
And then there’s the niggle.
The niggle that gnaws at everyone who’s ever been in the position of ‘having everything’ and who wonders why something inside them is still saying ‘there must be more to life than this’. The niggle that can only be numbed with more work, or more wine.
I've seen this niggle so very often, across clients who've made a ton of money for basically being in the right place at the right time (usually variations on a theme of the typical Oxbridge career conveyor belt where you’re paid in the top 1% of US or UK salaries – let alone global ones – for sitting at a desk for 50-100 hours a week and sustaining a system that says your lawyering or your banking or your consulting is worth whatever you can get away with charging for it). Even if they never say it out loud, it's always there... the niggle from the death-throe wiggle of the human that exists beyond the suit and the desk and the reports, trying to squeeze out a reminder of the responsibility to do something with this luck. This luck isn’t just about money. It’s about knowledge acquired, connections made, and understanding unconsciously nurtured of how one corrupt corner of the world works.
Those that deliver investment advice have as much interest in sustaining this system as anyone. As we’ll look at more in Part Four, there would be a revolution in financial advice if more people – especially more rich people – stepped out of the having-mode, numbers-obsessed system. In the meantime, the pressure of built-up niggles have forced a growing number of advisers into playing amateur therapist. And many do a fine job of it. But more often than not it is the therapy of the modern-day ‘stoic’ – less an attempt at enlightenment, and of addressing the niggle, and more a comforting speech aimed at justifying the hoarding, and the sacrifices made to enable it, and that concludes the niggle is nothing to be worried about, that it comes with the territory, and you should just go on holiday, or build an extension, and forget all about it. That, in short, is still stuck acting as if the money were in charge, still stuck judging worth by waste.
Yet more money wasted on the sort of stuff that doesn’t make a damn bit of difference, because it’s been blindly bought, isn’t only a problem for the world, it’s a problem for the waster… whether they can ‘afford’ it or not.
To tackle this, we need to consider a different meaning of ‘afford’.

Affording wisdom

There’s another meaning of the word ‘afford’, most commonly used in psychological settings, and in the form of ‘affordance’. ‘Affordance’ was coined by American psychologist James J. Gibson, who described it as follows:
The affordances of the environment are what it offers the animal, what it provides or furnishes, either for good or ill. The verb to afford is found in the dictionary, the noun affordance is not. I have made it up. I mean by it something that refers to both the environment and the animal in a way that no existing term does. It implies the complementarity of the animal and the environment.[i]
Affordance refers to the way in which an environment encourages a relationship between object and subject. Recall the discussion of transjectivity, and its role in meaning-making above. A door handle, for example, affords you the chance to open a door. It is pretty obvious why it is there, and why it’s shaped the way it is. On its own, as an isolated part of an environment, it does nothing, but in interaction with a human, its purpose becomes clear.
In the words of John Vervaeke: ‘You don’t really see colours and shapes, you see affordances.’[ii] Is there ‘redness’, for example, without a human eye to perceive it, and a human society, to label it ‘redness’, and give ‘redness’ a use, a purpose? The concept of ‘redness’ exists in a relationship of co-ordination between subject and object. In like manner, a baton is ‘graspable’, say, only when there is a thing that functions as a grasper. And a thing can function as a grasper only when there are things that present themselves to be grasped.
This applies not only to tangible objects, but also to concepts. And indeed it’s at the core of what our whole journey is about – seeing more clearly, and using our relationship with money to enhance our meaning-making ability.
The idea of ‘budgeting’ for example, when done properly,[2] begins as a means for examining life choices, but it’s ultimately about using our interactions with money as a tool for seeing more clearly – by presenting us with an accounting record of our chosen trade-offs, we become aware of what is most salient to us. What, through the lens of our current worldview, stands out to us. What this worldview has led us to deem significant.
Recall how the job of an unscrupulous salesperson is, in the context of a particular purchase, to narrow your worldview. To reduce your consciousness to a question of ‘Can I afford this?’, without even a ‘Do I want this?’ to go with it. We exist in a world where wants are a given, an unchallenged irrelevance, at best, so well manipulated are they by external forces.
This is the world in microcosm. Zoom out from the object of the salesperson’s focus, to price tags in general. To an unchallenged primacy of ‘more’. To the very latticework of language that forms the framework that shapes your relationship with money, and the stage on which your relationship with money is performed.
Using ‘I can afford this’ as an input into a decision-making process is idiocy. Using money as a means, not of affording stuff in a monetary sense, but of seeing more clearly your opportunities for making meaning as you move through your environment, of examining, and re-examining significance, and seeing most saliently those things that you deep down want to want, is wiser.
We want to align what we care about outside of us with what we care about inside of us. We want to be subjectively attracted to objectively attractive things. We want to (again borrowing from Vervaeke) realise (in the sense both of becoming aware of, and of making real) what is relevant, To do this, we need to care about the conditions that afford the most meaningful things presenting themselves to us, and of us being in a position to grasp them.
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The cultivation of a worldview that affords this sort of relationship with money is at odds with the typical approach of the advisory industry… even those sections of it that are getting increasingly good at remembering that their client is a human. Because even they still, unconsciously and with zero ill-intention, are acting in a world that measures meaning in monetary terms, that sees what the bank balance can afford, not what the human’s relationship with its environment can.

Investment management: you get what you don’t pay for

Investment management is the worst possible place to judge value by a price tag
Investment management is perhaps the best (or the worst) example of the unrelatedness of price and value. Ignoring those aspects of the advisory industry that are more to do with investor management, the investment management bit has one clear goal: to turn money into more money. Paying more, instantly and undeniably, works against this goal.
By itself, this doesn’t make expensive investment managers bad. But it does mean they need to prove their worth – to end up ahead net of their fees. If they didn’t, the demand for them would fall (or so you’d hope) and so, consequently, would their price. Because the fee comes first, and indeed is taken even when performance is negative, all investor returns are leftovers. So if your investment manager is either useless or greedy, you are most likely going hungry.
An immediate objection may be that no one picks an investment fund because it’s the most expensive, in the way people with no imagination or introspective capacity buy the most expensive house, holiday, or hockey stick. However, that doesn’t mean it doesn’t happen by proxy. Because if you ignore costs completely (as most investors evidently do, be it via a professional, or in their personal pension choices) you break the usually reliable link between lower price and higher demand and distort the market towards the more expensive funds.
The supply-and-demand price mechanism gets so distorted in investment-management for several reasons:[3]
  • Fees quoted in percentages – This means they look tiny, aren’t easily compared with each other in the context of how much they actually cost to an individual, and the compounding chasm between two prices is overlooked.
  • Branding – When the majority don’t have a clue what to base their decisions on, they’re more likely to use branding as a proxy for value. Advertising doesn’t come for free, but its costs are largely passed on to those on whom it works.
  • Belief – We like to believe in superstars that we can back to ‘win’. Even armed with all the evidence in the world, there’s no persuading some people that the sky-high wages paid to investment pickers are a total waste of money.[4]
  • Long-term judgment – The quality of an investment decision should be judged against the term of an investment… i.e. at least a decade, preferably several. This is difficult.[5] With tangible goods that are meant to last as long, it’s usually easier to see signs that they’re ‘built to last’. Investments don’t have these signs. Which is why you need to trust a philosophy first and foremost.
  • Past performance does not equal future performance – Everybody’s heard it, everybody’s clicked the button to say they understand the Ts and Cs in which it’s written. Everybody completely ignores it and makes it the primary influencer of their investment decisions anyway. Money that chases performance catches only disappointment. It’s a psychologically fuelled bubble-making machine.
  • Luck – Most of the investment-picking industry is about predicting what’s going to happen, and then inventing plausible-sounding-but-bullshit explanations for why it didn’t, while taking credit for everything going up around them. If fund returns were entirely down to luck, it would look an awful lot like it looks in reality, bar the 1% or so at the top that look like they’ve actually got some skill. But as you can’t reliably find those 1%, they’re a practical irrelevance.
There’s a still more fundamental way in which the system is broken. Ignoring those that would pay for branding to brag about (because if you’re really bragging about the branding of your investments, you’ve got bigger issues than if it’s making any money, and you’re almost certainly beyond help), paying money to make more money should be the most commoditised market in the world. When you’re paying for ‘more money’, there is no need for product differentiation and diversification.
For a commodity market to function effectively, the costs and benefits need to be obvious. In investment management, neither is.
The costs may look obvious – they’re right there on the factsheet you didn’t read – but they’re not. There are a ton of other costs that also play a part but aren’t disclosed, some of which can’t be more than guessed at anyway, and even then only with an amount of homework literally no one is going to bother to do.
Costs can easily double without you knowing it. Add on an unscrupulous adviser, and before you know it you’re paying 10 times more than necessary. In my experience, anyone with more than a few million invested is probably paying more on the unnecessarily convoluted ‘management’ of those investments than they spend on everything else put together, each and every year… without realising. Some even think that the management is ‘free’ because it’s somehow paid by the investments themselves.
If these people were to project forward the difference in final portfolio amounts a couple of decades down the line, they’d definitely weep, and may even turn murderous.
The benefits aren’t obvious either. And not only because – as above – you need multiple decades to judge performance (and even then there’s no guarantee it was a smart call as opposed to dumb luck).
Let’s assume that it’s possible to know if you made the right investment call based on the monetary performance. How do you know? It won’t be only that ‘it’s gone up’. What if everything else went up more? It won’t be that it went up in relative, rather than absolute terms. What if you put it all into lottery tickets, and happened to get lucky?
No one uses lottery tickets specifically as benchmarks, but they do often use things that may as well be lottery tickets… the start-up that actually made it from among the millions that didn’t, say.
More commonly, part of the endurance of an industry that’s been proven time and again to be paid extraordinary sums for being actively bad at its job is explained by people using bad benchmarks to assess their value. We’ll dig into this in more detail in Part Three, but one immediately relevant aspect is people’s propensity to deem an investment good value if it went up, relative to what would have happened if they’d stayed in cash, rather than another investment, say the cheapest and administratively simplest one available.
If someone fails to compare to the cheapest and administratively simplest alternative, it is because they have a mental block around investing in general being complicated and scary – which you may recall was the starting point for this whole book. The cure for this isn’t a clearer explanation of unnecessarily complicated products or the processes of stock pickers, it’s learning to see more clearly.
Unnecessarily expensive is always silly, but for a product where the aim is to make more money, giving some of that money away to no end is idiotic… yet it’s the raison d'être of (almost) the entire investment management industry.

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[1] Or ‘financial freedom’, which, in the way it’s meant in this context usually amounts to the same thing, even if the person saying it is adamantly blind to the difference. We’ll look at why in Part 3, Section 2.1.
[3] All of which, of course, are countered by seeing more clearly.
[4] It’s likely part of the unwillingness to let go of this belief is because of what removing that link between self-worth and net-worth or salary, or salary and intelligence, etc. would do the set of beliefs that support the world in which so many people live. More on this in Part 2, Chapter 4.
[5] More so, probably, because people don’t know much about investing… so they’re prone to look at performance way too often after the initial investment.
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[i] James J. Gibson, The Ecological Approach to Visual Perception
[ii] John Vervaeke, Awakening from the Meaning Crisis, ep. 10
Last modified 27d ago