A longtime client (Carol) shared her concern that it felt like the market was due for a big drop. I smiled and told her that she already knew exactly what I was going to say. Her reply was “tell me again.” It’s the one investment topic an investor can discuss, understand, process, and still wish to revisit regularly. It’s the vitamin C of investing.
Many vitamins (A,D) stay stored in the body for a long period of time. Vitamin C? Not so much. Your body digests it quickly and needs it again and again, just like Carol needs to discuss her fears about experiencing a large loss even though we did at the first meeting, and at every review since then. She agreed to stay the course no matter how scary the volatility gets when we first met. But we also agreed that we can talk about it whenever we need to, which we have been and will probably continue to do.
Tending to Misconceptions
Carol’s need to discuss this regularly isn’t because her long-term memory is failing her. She gets bombarded by economic and investment commentary throughout the year. Naturally, this can lead to some misconceptions that could cause Carol serious harm if she acted on any of them (for example, moving her portfolio to cash because she read a series of articles predicting a crash). Carol is pushing 60 and was nervous about the markets having another large drop just as she was transitioning into a part-time work chapter. She needed a refresher on the role of stocks in her portfolio.
Iterative Conversation
In Sara and Jack Gorman’s great book, Denying to the Grave, they suggest that the ideal process for tending to a person’s misconceptions about a serious topic should be interactive and iterative – that we’re more likely to use the reasoning part of our brains (prefrontal cortex) when we’re engaged in a discussion, than when we’re digesting something passively (article, seminar, podcast, etc.). Since Carol’s concerns about her money are definitely serious, we’ll have a conversation and we’ll revisit it annually to deal with any new misconceptions that arise.
Now and again, a client will email me a question about a recent stock market drop, or, gulp, what the stock market is going to do next. My friends tease me for not being much of a phone person, but when it comes to addressing a client’s concerns about the safety of their money, I will always ask that we have a discussion on the phone or in person. Emails can certainly be iterative, but they’re not interactive. So even if you think the question is nuts or you’ve asked it before, ask it anyway. Your advisor will just see it as an invitation to talk.
Happy planning,
Barrett
