It’s a truism that the financial system lauds rationality and ignores emotion.
It pursues algorithmic models to game the share-market; but overlooks the power of human decision making.
It uses psychometric testing to find out somebody’s feeling about losing money.
It insists on having rational, quantifiable goals instead of an emotional understanding.
It treats money as a mathematical equation.
And tries to impose the same rigidity over the humans that control the money.
It talks in jargon when humans communicate in feelings.
It’s got it wrong.
And it compounds this error – with a forceful foolishness – when people are going through a divorce.
HELP IN A HURRICANE
Why on earth do we think it’s good enough to grab somebody in the middle of their emotional hurricane to yell at them:
“I’ve got a great investment option for you!”
“You can claim a tax deduction for this!”
“Have you thought about your superannuation?!?”
“You should have a budget!”
“I’m really, really good!”
“Everyone else can do it, why haven’t you?”
“Who’s going to make the decisions about money?”
Wouldn’t it make more sense to instead show them the way to a safe harbour? Where they can regroup, recover and repair before setting out again?
Would it not make more sense to yell out:
“Hey, over here, we can show you the way!”
“Are you ok?!”
“Let’s get to safety first, then talk.”
“You can make it!”
“I know the way!”
“What can I do to help?”
Because there’s a judgment that comes from this mantra of rationality. We’re telling people that their feelings are a problem when it comes to their money.
We’re ignoring the idea that money should help our client’s lives. It shouldn’t be something they feel guilty about.
We’re telling them that we’re only interested in the numbers.
We’re not interested in their ‘messy’ feelings.
WRONG APPROACH, WRONG OUTCOME
And by continuing to make this mistake by:
focusing on the ‘less-emotional’ partner;
spouting numbers and jargon
avoiding emotional conversations
We’re not serving the people we’re meant to be helping. Instead we’re making them feel ‘wrong’ for having these emotions.
We make them feel weak, or soft, or ignorant, or silly. Or worse – irrational.
And by doing this we’re alienating them from a system none of us can escape – money.
Which makes too many people avoid talking about their money.
Or asking their questions for fear of sounding dumb, or looking foolish.
And too many people avoid asking for help, because the person they ask might make it all worse.
Put another way:
Do we really think it’s a good idea to force the square peg of emotion into the round hole of rationality?
Do we really think that helps people make better financial decisions?
Do we really think that leads to the kind of outcomes we want for our clients?
Do we really think that helps?
Can We Help Instead?
Of course it doesn’t.
So what if we tried doing things a little differently?
Let’s expect more from the system.
How about us advisers start being the bridge between the cold, rational world of money and the emotional reality of life?
How about we take the time to get to know our clients and then help them build their financial life?
Let’s consider their emotions, aspirations, hopes, fears and all, not only their balance sheet and cashflow.
How about we encourage people to consider their emotions, and work to recognise the impact they can have?
How about we talk about a range of outcomes and the compromises required to achieve them?
Let’s be the sounding board. Not impartial, not impassive, but invested and involved.
(If you’re looking for an adviser, find somebody that does all these things. They’re out there and will make a huge difference to your life.)
Because knowing the way is only part of it – knowing the system is only the start.
If we can’t help people get to where they’re going, then we’re not much bloody use, are we?
These are just some of the traps the financial system faces – and a few ways we can avoid them.
The third part of this article is all about some of the traps you face.
The emotional whirlpools that can suck you in and slowly drown you.