Why Smart People Make Bad Money Decisions | Ep. 50

Your calm self is not always a good judge of what your stressed self will do.
In this episode, we talk about why smart people still make poor financial decisions under pressure.

What I cover:

• Why good intentions do not guarantee good financial decisions
• How hot-cold empathy gaps affect investing, retirement, and estate planning
• Why people misjudge how they will feel during market crashes
• The difference between risk capacity and emotional willingness
• How too many options can create analysis paralysis
• Why pre-deciding rules and automating good behaviour can help protect your future self

Planning is easier before life gets emotional. Subscribe for more plain-English conversations about investing, retirement, tax planning, and better financial decision-making.

References: https://www.cmu.edu/dietrich/sds/docs/loewenstein/hotColdEmpathyGaps.pdf

https://dtg.sites.fas.harvard.edu/Gilber%20t&%20Ebert%20%28DECISIONS%20&%20REVISIONS%29.pdf

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Transcript

Sierra 0:00

People know exactly what they should do when it comes to money, health, and their time, but do the opposite. That's because decisions aren't just about having knowledge or information. They're also about psychology, emotion, and even our physiological makeup that make us what we are Human.

Tre 0:18

That's the intro.

Sierra 0:19

That's the intro.

Tre 0:20

You need to tell us what we are talking about, because because I don't even know what we're

Sierra 0:25

talking about. You're gonna talk about it when I do.

Tre 0:28

What are we talking about?

Sierra 0:29

I say, hello. Welcome to the Plain English Finance Podcast.

Tre 0:31

Oh, this is all going in there.

Sierra 0:32

Why?

Tre 0:33

I'm not cutting it. Are you editing this episode?

Sierra 0:35

Mom is editing this episode.

Tre 0:37

This she mom hasn't done. If you're, if you're in a while.

Sierra 0:40

Okay. Do you want me to start over then?

Tre 0:42

No. Okay.

Sierra 0:44

Okay. Don't. Why are you stressing me out?

Tre 0:47

I do not doing anything.

Sierra 0:49

Lemme do with you. Okay. Hello and welcome to the Plain English Finance Podcast. I'm your co-host Sierra. That's our real host, Tré. But I am taking the lead on this episode because sometimes we do that, and I had a topic that I found and was talking to Tré about a little while ago, and he said I could go for it. So I've been stressing about this because it's kind of like a lot of information that I'm not always good at. Conveying my thoughts clearly. So I hope that

Tre 1:23

makes two of us so

Sierra 1:24

good. Maybe that'll show up in our listener base numbers and watch them drop. Hopefully not stick around. Anyway. Um, so this episode is actually about a couple of different things. Um, mostly about the science of making decisions. So I recently started following someone on social media because if you know me. Most of my social media feed is comprised of different aspects of psychology and human behavior and biochemistry and anything like that. So somebody I recently found, his name is Simon Viton. I hope I'm saying it right, and he studies the science of decision making. So a couple of videos he was posting, um, like as I was just passively learning, I was like, man, this really relates to what we talk about because the whole point of the podcast is

Tre 2:21

decision making. Yeah.

Sierra 2:21

Well, yeah. We used to say it in the intro, I don't know if we do anymore where you would say, uh, the podcast dedicated to helping you make good financial decisions.

Tre 2:29

Mm-hmm.

Sierra 2:30

So part of making good decisions in general is not only about knowledge, which I said in the intro. It's also about being a human and all the things that go into that. So we're gonna talk about some of the information, a couple of things he cites and how it can relate to. Finance and financial decisions.

Tre 2:54

I'm excited.

Sierra 2:55

Yeah. So we're gonna talk about how bias, emotion, and something called affective forecasting, even our physiological temperature impact decisions. And Physiological temperature. Right, That's, temperature. Alright, that's, we're gonna talk about the, study about that.

Tre 3:11

Okay.

Sierra 3:12

So, okay. I wanna get your thoughts on this quote First.

Tre 3:17

Okay.

Sierra 3:18

I mean, well, therefore I'll choose, well,

Tre 3:23

not true at all.

Sierra 3:25

Okay, Go on.

Tre 3:26

I was, I was trying to figure out what you meant by that, but so it is ba basically saying that because my intentions are good, it means I'll make good choices.

Sierra 3:34

Yeah.

Tre 3:34

Completely wrong. Yeah. Lots of, I, I would say that's almost the most dangerous type of person.

Sierra 3:39

Yeah.

Tre 3:40

Because you, I think a lot of people, it's very easy to believe that because you. People think this all the time, like, because I'm a good person, therefore I'll make good decisions.

Sierra 3:52

Mm-hmm.

Tre 3:53

Or good decision for somebody else. You see it a lot with power of attorneys and things like that where you are in charge of making decisions for somebody else. Mm-hmm. Which we'll talk about in the, probably in the next episode. Um, and that is, it's very dangerous when you don't have the skill set or the knowledge to, to actually make an informed choice. So,

Sierra 4:13

Yeah.

Tre 4:13

I would say that's definitely wrong.

Sierra 4:14

Yeah. So we've talked about this before on, I'm sure, previous episodes. Like I know we've talked about this idea, I'm

Tre 4:20

sure we have. Yeah,

Sierra 4:21

yeah. Where it's like somebody, somebody even giving you advice, it's like, oh, they're my mom or my,

Tre 4:28

yeah.

Sierra 4:28

Great uncle who. Knows about the stock market. He must have, he has good intentions. They have good intentions, but they're not giving me good advice necessarily. Mm-hmm. So we have to separate those things. Um, and it, it also matters for yourself as well, so not just about other people, but me, myself, I mean, well, so therefore I'll choose Well, is not always true.

Tre 4:53

Mm-hmm.

Sierra 4:54

Okay. So, oh,

Tre 4:56

sorry. Keep going.

Sierra 4:57

Okay. Or Or am I like shouting into the mic? Sorry.

Tre 5:02

No, no. Okay. I, the fun thing is about not leading the episode is I get to look at the technical side and I get to fix the things during the recording that I have to fix afterwards that I don't

Sierra 5:10

look at when it's me not taking the lead. Okay. So somebody named George Stein, I think is how you say it, wrote a paper on something.

Tre 5:22

Who, who is he?

Sierra 5:23

He is in, I'm not sure. Let me look.

Tre 5:28

Have you

Sierra 5:28

got a paper

Tre 5:28

there?

Sierra 5:29

She's from,

Tre 5:29

yeah. Okay.

Sierra 5:30

Car. I, I don't know how to say that either. It's also kind of small.

Tre 5:33

That's okay. Um, so just for our future stuff, like the name is less important than the, like the

Sierra 5:41

credential

Tre 5:42

credentials, right? So for example, this, he's a, looks like he's a professor from this

Sierra 5:47

Carnegie Mellon

Tre 5:49

Me University. Yeah. I

Sierra 5:51

don't

Tre 5:51

know if that's, so I would say like, George from.

Sierra 5:54

Yeah.

Tre 5:54

From the university name, like a professor of the university or something like that?

Sierra 5:57

No, just someone named George.

Tre 5:59

Yeah, somebody named George does not give. That's credible. Who cares what George

Sierra 6:04

does? George knows what's up. Lemme just take a look here. So, yeah, he's, I think, yeah, I think he's an, he's a professor. American Psychological Association. It is listed. So anyways, that's good. Yeah. Um, this paper is specifically about, uh, so it's called Hot Cold Empathy Gaps and Medical Decision Making. So the paper is written with the focus of making medical decisions.

Tre 6:33

Okay. Yeah.

Sierra 6:34

Just as a little caveat there, but,

Tre 6:36

so like if somebody was diagnosed with an illness, like how they make decisions around what to do and

Sierra 6:41

Yes. Okay. Usually around treatment, so whether they're in. Well, okay, let's talk about it.

Tre 6:46

This is the one that you was talking to me about the other day?

Sierra 6:48

Yes.

Tre 6:48

Okay. Okay.

Sierra 6:48

Yeah, I think I talked to you about both of them, but this was the one I kind of was like, that sparked the idea originally to bring this up on the podcast, so. Okay. So any ideas on what that means? Hot cold empathy gap, just based on the title. I know I'm putting you like really on the spot.

Tre 7:06

No, that's fine. Um, what would I think that would mean? That would mean that. Right. I dunno. So, so something about, uh, the way that you're feeling, or if you have empathy or no empathy for something dictating your decisions or something like that.

Sierra 7:27

Mm-hmm. Okay. Okay. I'm, I'm realizing, I'm kind of guessing here, but I did like, okay. I know what the paper is about. It's about the physiological state. That you are in.

Tre 7:41

Mm-hmm.

Sierra 7:42

I believe it's referring to the empathy gap being between your states, for example, um, the calm version of you misjudges the emotional version of you. Oh,

Tre 7:57

okay.

Sierra 7:57

So there's a gap of empathy for that version of you versus that version of you.

Tre 8:02

That makes sense. Yeah.

Sierra 8:03

So the scared version thinks fear is permanent. and The confident, calm version thinks risk is easy.

Tre 8:11

Mm-hmm.

Sierra 8:12

Okay. So imagine the, the example Simon, who I was mentioning earlier, who I follow on social media now, uh, talked about was it's a Tuesday afternoon, you're sitting in your office. It's like, kind of, kind of cool. Nothing's happening, you're bored, it's dark. You're just kind of getting on with your day. And then another day you're at a party and you're sweating, you're dancing, your heart's racing, um, and you're in two different states. Mm-hmm. Two different physiological states. You're in a cold state one day, you're in a hot state another day. So obviously different things can put you in those states.

Tre 8:52

Mm-hmm.

Sierra 8:53

But they found, um, that depending on the state you're in, your decisions. Often are look very different because humans don't just make decisions based on information. A lot of the time they make it based on how they feel in the moment, and they often misjudge, like I said, those versions of

Tre 9:13

themselves, how they gonna feel differently. Did they give any examples of those type of decisions?

Sierra 9:17

Uh, so for the paper, they, it's mostly about medical, um, like we talked about. So imagine you're talking to someone. You're just sitting in your living room having like a glass of water, whatever, and you're in a cold state basically, and they're like, oh man, so and so just got diagnosed with cancer. And you're like, oh man, that's terrible. Like, um, and you're talking about it, right? Mm-hmm. Versus now it maybe you're talking about different treatment options. Oh, there's this treatment, like he's probably gonna do radiation, he's probably gonna do. Like chemo, whatever. Now to change it up, you are in a medical office and the doctor comes to you with news that you have cancer. Well, suddenly, like your heart rate spikes, like your cortisol's up, like you, you enter into that hot state and they're like, okay, what do you wanna do for treatment? And you're like, I'm not doing any, I'm not doing this chemo, or I am doing this. Like, you start making decisions maybe a bit more rashly.

Tre 10:19

Mm-hmm.

Sierra 10:20

Um, so anyway, the paper does talk about different like. Pros and cons for that and different medical diagnosis. Um, a apparently one is better to wait. There was like a type of cancer that was, it's better to like, not rush the decision. Anyway, it kind of talks about that in there, but I wanted to focus it on finance. So, um, one of the examples that I thought about was, I'll stay invested during a crash. So I'm sure if you want to like jump in and talk about any of this, these things feel free. But I'm sure a lot of people think, like right now I would consider the market in a cold state. Like people are in a cold state. Like it's, the markets are doing okay at the moment. Um,

Tre 11:07

to a degree people are still scared of stuff, but Yeah, I see what you're saying.

Sierra 11:11

Yeah. Versus, so maybe like, I guess the whole point. Of this is kind of maybe to get your thoughts as well on how you coach people into making those decisions and then sticking to them. Because the whole point of a good decision is if you're gonna like stick to it.

Tre 11:36

Yeah, absolutely.

Sierra 11:38

So if someone says, I'll stay invested during a crash, they're like, yep. yeah, Tuesday afternoon and Tré's office is like, oh yeah, I'm fine. I will definitely not wanna sell everything, Tré, don't worry. How do you like, and then

Tre 11:51

it hits.

Sierra 11:52

Yeah. How do you

Tre 11:53

navigate that? Well, it's interesting because I, there's, there's two sides. Um, there's the side that I always will push somebody to invest to something that is objective, that we call capacity in my industry. So it's their capacity to absorb losses, not their emotional. Capacity to dissolve losses. So I'll always push you to invest according to your actual capacity as you as a human thinking objectively. Mm-hmm. Right? So that's where I start and how I build it afterwards. I afterwards, I still get them to like, I still have the conversation with'em and I try to figure out where their emotional capacity is, but there's a direct correlation between somebody's emotional capacity and their financial literacy.

Sierra 12:40

Hmm. Okay.

Tre 12:41

So you'll find that a. The higher somebody's financial literacy is, the more willing they are to take on market volatility. So market risk, that is very, there's very different types of investment risk out there, but I'm talking specifically about market risk.'cause we talked about the market's dropping, right? That's very different than somebody's investments dropping because. Depending on the way you're invested, your investments could go to zero and the market be absolutely fine. Mm-hmm. Right? That's, that's happened to people. That's, that's when you take on other types of risk that you can get into that in a different time. But I'm pretty sure there's probably an episode on that. Yeah. Uh, but that's not what I'm talking, I'm talking about market risk. I would say that. Yeah. So when you invest it to that you invest it to their, you invest it to their capacity when it comes to,

Sierra 13:32

sorry. Quick question, just because that's tied into this. You're talking about their capacity. What if, how do you measure their capacity?

Tre 13:42

Great question. So capacity is basically you take what their income is, not nec, not the dollar figure, but how they earn income.

Sierra 13:50

Mm-hmm.

Tre 13:51

The stability of their income, um, and future commitments. So a good example is a firefighter has a very stable income. Because the stability of their income is not based on markets. It's not based on, um, how well the economy is doing. They're government employed. As long as people continue to exist, you're gonna need firefighters. Okay? So very extremely stable income. Um, that individual needs less cash than a realtor. Realtor needs a lot more cash because their income is tied directly to how many people are buying and selling homes, which is tied to how well the economy, um, is, is moving along. Mm-hmm. Okay. So two very different types of income that you would handle completely differently. Yeah. So the firefighter. You would then say, okay, so you have a very stable income. We need on the lower end. We'll just, you know, a fully funded emergency fund is now like three months or whatever like that. That individual is in their thirties. This money is for the long term.

Sierra 14:57

Mm-hmm. It

Tre 14:58

means that the ability to absorb losses is almost infinity in the short term because this money is when they're 55, 60 years old. Okay? It means that they can handle a hundred percent equity, let's say on the other hand that this person is putting this money aside to buy. Home in the future. Okay. That's where, okay, you now, in the next three years, now, you don't have the same ability to absorb losses, so your capacity has dropped. But that individual may have a very high financial literacy, so they are, like for me, for instance.

Sierra 15:34

Mm-hmm.

Tre 15:34

I do not put money into fixed income and cash to buy our next home that sits in the markets. If the markets happen to drop at that time, I won't buy the home. It is that, that simple. I'm okay with that being the decision making point. Same for my next vehicle purchase. If markets drop 15, 20% just before I'm about to sign a check for a$50,000 for a vehicle, I won't turn the check for a$50,000 vehicle. I'll, I'll wait a year. Right? Yeah. Buy a cheaper vehicle. I'm, I'm comfortable with making those decisions because I know the numbers. I know in the long run. I'm gonna be ahead of, people often say they're like, well, what if you need the money in the short time? What if you don't is always the issue. It's like, even if that was the case and markets do drop 20%, and that caused me, let's say I didn't wait and I still wrote the check for the vehicle. But I've been sitting on that money for five years. I'm still ahead. Yeah. With my money dropping 20%, I'm still ahead. Right? Yeah. Same with buying the house. I'm still ahead if I just,'cause I just put it a hundred percent equity all the time. I'm comfortable with that, but some people aren't. So that's a, that's a change where if I was advising somebody based on capacity and I needed the home in three years, that's what I was planning. I would not recommend a hundred percent equity. Right. That's not my capacity for risk is technically lower, but my emotional state allows me to absorb and take on more risk.'cause I understand it more. Yeah. Somebody might be the opposite where their emo their capacity for risk is really high, um, because of their life. Yeah. But their emotional state is really low and they can't really afford to. Like they're scared of those markets ups and downs, and that's where focusing on financial literacy can help them. Mm-hmm. But there is something to be said to. I, I say this to people when, especially when they're start, they're newer, they're starting out, or they're, farmers are notorious for it because they don't invest and they sell a bunch of land and they have a million dollars, 2 million,$3 million. So it's, it's like you go from nothing to, to now market swings. Uh, very scary. Um, but I would much rather invest you to your capacity for risk and make sure we have a plan and do it properly and coach you to it than. Invest you in a way that I know is going to be detrimental to you just so that you can feel better when you don't truly understand what you're feeling better about. Because in a market crash, a, if you have a 50 per 50, 50% stock portfolio, stock to bond portfolio, and the right mix, I think according to your capacity is 80 20. Mm-hmm. The difference is a six or 7% drop. Right, and if you have a million dollars, that's a 60 to$70,000 drop Doing it the way that I think you should do it versus the way that you want to do it. My question for a lot of people, a lot of advisors out there is do you think that person that's scared is going to panic more or be more likely to sell if they experience Because markets are on fire either way. So if they're$1 million portfolio drops to$800,000 or drops to 700 and$730,000, do you think that$70,000 difference is gonna be the reason they sell or not? No. For the vast majority of people, it is not. They would be, there would be the same, same likelihood to sell, whether that portfolio drops to$900,000 or$880,000. Hmm. That when you're, when you're getting, when you're getting to drops, people are scared regardless. Nobody thinks back to 2008 and thinks, man, I am so glad my portfolio only dropped 35% and didn't drop 37. Man, if it dropped to 37,

Sierra 19:17

I'd be out.

Tre 19:17

I'd be out. No, that's not how you think. You are terrified that you are losing money. Yep.

Sierra 19:22

Yeah.

Tre 19:23

Regardless. Yeah. So because that's the way that you know, people are going to react. You invest them properly, and then you coach, coach, coach, coach, you make sure that, that's why when I'm like, my quarterly videos and the podcast and all this stuff focuses so heavily on the downside because I know it's going to happen. I know it's going to come. Mm-hmm. But the upside. Has been worth it throughout history to absorb that downside. It's been better for you. When I say invest your capacity, somebody, somebody came to me the other day, um, potential that we were just doing like the intro call or whatever. Mm-hmm. And this individual has about, um. I it was like almost$700,000 of retirement savings, but it sat in a balanced fund her entire career. If that was an equity fund, it would be double. right? It should just invest it to a capacity, and it's not a case of, oh, you didn't expect that equity fund to outperform a balanced fund, that is what you expected it to do. And over a 30 year period that that very literally cost that person$700,000.

Sierra 20:32

Yeah. Right.

Tre 20:33

It's not worth it. It's much better that you invest according to your capacity and then learn and learn and learn and feel and push learning.'cause when the markets are dropping, when the, when the emotion is happening, that's my job. It's my job to do my best, to control your emotions and to show you that we have a plan. We are expecting this. Mm-hmm. Because if you go home and you are not, that's why stress is so much. And for other advisors, stress the downside. As much as you possibly can. Yeah.'cause everybody loves the upside. When I'm looking at returns with people and I'm like, okay, yeah, these are the great returns. Everyone loves a hundred percent equity portfolio. I want that portfolio. Yes you do. Of course you do. Everybody wants that portfolio. But that's why I focus on the downside. I'm like, COVID, this dropped 30%. 30% like that.

Sierra 21:21

Yeah.

Tre 21:22

You have to be that. And that's okay. That like I'm, I'm not saying that was. Abnormal. That is, that happens every once in a while and it's going to happen again. And when it does, you need to better to stay invested through that.

Sierra 21:32

Yeah. So would you say, okay, so tying it back

Tre 21:35

off, sorry,

Sierra 21:36

that was a big tangent.

Tre 21:37

Sorry.

Sierra 21:38

It's okay. okay. Bringing it back. So would you say then, like, while I was looking at this, a couple of things were coming into my mind. This is just one part of it, by the way. Um, so we're gonna wrap this part up really, really quick, but. Um, for me, I am the type of person who likes to prepare and I like to think of the worst case scenario and that those kinds of things dictate my decisions. Thinking of like the worst case outcome, like preparing, thinking of all of the what ifs before they happen.

Tre 22:13

Mm-hmm.

Sierra 22:14

Whether or not that's the right way to do things or a healthy way to do things, I'll let somebody else decide that that's how I do it. Okay. Um, but. Would you say for those kinds of things? Um, that's basically what you're doing. You're preparing people and having those conversations now, because it's like, imagine if you never thought of, never thought you're gonna get diagnosed with an illness. You know, like you're just, that's not part of my thought process. I don't wanna think about it right now. But then when, if or when it happens, the shock,

Tre 22:49

you have no idea how to react. The

Sierra 22:50

shock, the shock is so intense, like. There's a couple of things here that make me think of like emotional regulation, which is a huge thing. Like in the psychological world, a lot of people talk about it. We're also parents now. So I like do a lot of research about that and like the nervous system and how it all is affected. Um, but I just think capacity, to me, I hope I'm not offending anyone as per usual. Sounds like a lack of emotional regulation, like. You are going to be in these states regardless, like you're going

Tre 23:25

capacity Seems like a lack of emotional regulation.

Sierra 23:28

So when, sorry, like the measurement of capacity. So let's say someone has low capacity is how I would imagine you would say it. Like they don't have the capacity for

Tre 23:37

like emotional capacity.

Sierra 23:39

Yeah.

Tre 23:39

Or. Like actual capacity?

Sierra 23:41

I don't know. I say

Tre 23:42

so I think you're talking about the emotional side of things, like Yes. A low willingness to take a risk. Yes. Yeah. Okay. Not capacity. Capacity is pretty objective. Capacity is like,

Sierra 23:51

because you said numbers based?

Tre 23:53

Yeah, like income. Yeah. It's very numbers based. It's very like, yeah,

Sierra 23:56

but it's like when you might, you might say that on paper. But then when the drop hap, if they're like, yeah, yeah, yeah, I trust you. It's fine. Everything's good. Which I know you don't like that.

Tre 24:06

So emotional willingness is what you're talking about? Yeah. Like the emotional willingness to take a risk.

Sierra 24:09

Yeah. Yeah.

Tre 24:10

Absolutely.

Sierra 24:10

To me, that sounds like they are not able to like regulate because it's like, as someone who, it's like when, when stuff goes wrong. like nobody likes the hot physiological state when it's in a negative sense.

Tre 24:24

Mm-hmm.

Sierra 24:25

Right. It's like you're having probably things like anger, fear, like all of those really intense emotions. Yeah. Um, but if you can't regulate it, you're going to make bad decisions. If you're trusting that version of yourself to make.

Tre 24:39

The decisions that are impactful to Yeah, absolutely. Yeah. You're almost what, what good decisions could be made in that state?

Sierra 24:45

Yeah, so

Tre 24:47

I'm sure there are some, but I can't think of any at the moment.

Sierra 24:50

I guess like the wrap up for that part is in a financial way, you should protect yourself from that version of you, even if you haven't like met them yet.'cause that was something else I said, what if these people have never experienced it? It's like, oh yeah, re, I'm gonna be fine. Don't worry.

Tre 25:09

Yeah.

Sierra 25:09

Like, I'll stay invested, but when it comes, they, they don't know because they've never experienced it necessarily. So I guess that's where like protecting yourself and preparing with you.

Tre 25:20

I think that, I think that applies to a lot of decisions. Like, uh, a lot of decisions should be thought about way ahead of time.

Sierra 25:28

Yeah. Oh, for sure.

Tre 25:29

Because if you. The first time

Sierra 25:30

I'm ing it to finance for the podcast, but I

Tre 25:34

percent

Sierra 25:34

agree,

Tre 25:34

you're well. Yeah. So think linking it to pod, the podcast, the finance, sorry. If you are in a place where you've never thought about your portfolio dropping 30, 40%, then you probably are not prepared for a optimal portfolio, right? If you have never experienced it before.'cause there's often a lot of people will also underestimate, I find,

Sierra 25:58

yes. A lot of, well that was what it said. It's like overestimating and underestimating.

Tre 26:02

Did they say, did they say like, like from a gender point of view, who would be more likely?'cause I find

Sierra 26:08

I didn't, it's

Tre 26:09

very anecdotal, but I find

Sierra 26:11

I didn't see

Tre 26:12

anything. My female clients tend to underestimate their own risk tolerance.

Sierra 26:17

Oh. They're more conservative, like in that sense. Like they think, oh, I can't handle it.

Tre 26:21

Yeah.

Sierra 26:22

I wonder if that,

Tre 26:22

but they're not the ones that have called me like, like at every drop. It's like the people that I were like, oh, I, I'm not sure, like the definitely are underestimating their own willingness to, to experience the ups and downs.'cause the amount, the amount of them that I'm thinking back and I'm, they're saying, oh, well you've just said this. That's normal, that's gonna happen. It made sense.'cause on the news, the Iran, what was going on. So it made sense. Like, so I didn't panic, I didn't bother calling you. I was like. Great. That's, that's exactly what, but you you thought that you'd be scared, so I, I dunno. Um,

Sierra 26:58

okay. Well that actually leads into the next point very, very well. Okay. Because there's something else called Effective Forecasting.

Tre 27:05

Okay.

Sierra 27:05

So that paper didn't, I didn't see anything and I, like, I didn't see anything specifically about that, but I feel like there might be some merit behind it. But anyway, effective forecasting, any idea what that could mean?

Tre 27:18

Effectively forecasting the future?

Sierra 27:19

Yes. Basically.

Tre 27:20

Or how you'll feel in the future, or,

Sierra 27:22

yes. Okay. So this one specifically is people are bad at predicting future feelings. So say similarly they over, I feel like I'm pretty

Tre 27:30

good at that.

Sierra 27:31

They overestimate how bad, bad things are gonna feel.

Tre 27:35

Okay.

Sierra 27:36

And forget about basically how much complexity there is to life and that. like, for example, oh, if my, um, portfolio drops in retirement, I'm gonna be miserable. Like

Tre 27:50

mm-hmm.

Sierra 27:50

If I can't spend this money, it's like, okay, well actually there's a lot more to life than just that one thing, right? So anyways, they, they overestimate pain of bad outcomes and overestimate happiness from purchases or status wins. So that's the other thing.

Tre 28:06

Hugely. Yeah.

Sierra 28:07

So a lot of people often will be like, when I get this. Thing or accomplish this goal, like whatever it is in their life, then I'm sure everybody's heard that before. Like, then I'll be happy, then I'll be happy.

Tre 28:21

I was talking to, I met with a client yesterday and she were talking about stuff and she said, um, she was like, I dunno if I heard it on your podcast or somebody else, and it wasn't on mine, so now it's gonna be on mine. Um, we're

Sierra 28:33

stealing

Tre 28:33

it. Uh, she said that, uh, somebody, she was quoting somebody and they said that. The, the house, your dream car, sorry, your dream car, that was your dream car five years ago, is now the same car that you get annoyed at when, when it doesn't start. Or like it was something like that. It's this, it's the old car in your garage that you want a new one. Mm-hmm. Like for, but that used to be your dream car and it was people's inability to, to be content because we were talking about contentment.

Sierra 29:02

Yeah.

Tre 29:02

People's inability to be content with. Like they tie things and stuff to being happy, being content. When reality, in reality, contentment, being happy is a, is a choice that you make regardless of your circumstances. Yeah. It's like joy. You can be a joyous person in a miserable circumstances. Yeah. Right. But you choose within yourself, are you going to be a happy person? Mm-hmm. It is not, doesn't necessarily take outside. Influence to make you happy. And you see it throughout human history, see it in the concentration camp in in Germany and things like that. People being happy while they're subject to terrible conditions. Mm-hmm. And again, it's a, it's a choice and it's like if somebody in those type of conditions can be happy. I feel like us in Western society and handle and handle our five year old's car lot be to be happy about, you know, um, yeah, for if you choose that path or you can choose the other path, which media and marketing and everything like that wants you to pick, which is consumer consumption. Yeah. The more you consume, the happier you'll be. Funnily enough, it doesn't work, which means that you'll consume more and more and more and more and more until. You consume everything.

Sierra 30:18

Yeah. Well, and that, that point you made about the, like female versus male, uh, like perception I guess made me think about this is because. The, the whole point of that part of this paper. So this paper is actually two parts of it. Um, the title of it is Decisions and Revisions, the Affective Forecasting of Changeable Outcomes, and this is written by some dude named, just Kidding. Um, Um, I, one is from Harvard University and one is from Massachusetts. Ma, Massachusetts, is that how you

Tre 30:54

say it? Massachusetts? Something like that.

Sierra 30:57

I remember actually, it's a really quick side story that's just kind of funny. We, I was in a team meeting once and we were playing a game and it was like, name as many states as you can. Oh, just heard. And I was typing and they're like, Massachusetts. And I'm like, okay. And I start to, I'm like M-A-S-S-A. TCHI just started like, and they're like, no, no. And it was on a Zoom call. It was, I was new to the team and it was horrible for me. I was like, I hate this so much. I look so dumb. But anyway, um, Massachusetts, mass, no, I can't say Institute of Technology.

Tre 31:34

MIT is what people

Sierra 31:35

call. Yes, that's the one. Yeah. MIT. There we go. That's why they shortened it. Yeah. Nobody likes that, that state, that word is just too hard. Anyway. Um, so these Daniel from Harvard and Jane from MIT, um, wrote this paper, so, okay, let's focus on the title for a minute. So, decisions and revisions. The Affective Forecasting of Changeable Outcomes. Okay, so what do you think? It might talk about

Tre 32:03

Outcomes that you can change

Sierra 32:05

Yes. And the forecasting of such.

Tre 32:07

So do you know the serenity prayer?

Sierra 32:09

I do.

Tre 32:10

Yeah, it just reminds me of that.

Sierra 32:12

Oh,

Tre 32:12

You You have to say this front you right now. Do you remember? I can't even, it's like, it's like, give me the

Sierra 32:17

courage to know. No, gimme the.

Tre 32:21

Oh, I can't, dang it. I can't

Sierra 32:22

remember. I know, it's like the end is like, like the

Tre 32:24

wisdom to know the difference.

Sierra 32:25

The difference, yeah. Basically what I can change, what I can't change. Yeah. And the wisdom to know difference.

Tre 32:29

Sorry, keep going. I'm gonna just look it up and say it.

Sierra 32:31

Okay. Yeah, yeah. Um, which is, so as humans, a lot of times we think that having options will make us. happier. Um,

Tre 32:46

so it's, uh, God grant me the serenity to accept the things I cannot change, the courage to change the things I can and the wisdom to know the difference.

Sierra 32:53

Such it's such a good, like thought.

Tre 32:56

Yeah, it's great.

Sierra 32:56

I love it.

Tre 32:57

Yeah.

Sierra 32:58

Yeah.

Tre 32:59

I mean, I know it's, I think it's the alcohol, like effects. A

Sierra 33:02

Yeah.

Tre 33:04

But it applies to every, but it applies to so, so much. It applies to anything. People drastically underestimate what they can and can't change.

Sierra 33:10

Yeah. And

Tre 33:10

how much, it's funny because control and power they actually have as a person to

Sierra 33:14

the way you word it, is very differently than the way I think of it.

Tre 33:18

What do you think of it? How do you think of

Sierra 33:19

it? You think of it in an empowering way, and I almost think of it as like a releasing way where it's like, sometimes I think I can control things that I can't. So to me, having that in my mind is like, this is out of your control. Stop trying so hard to,

Tre 33:35

Hmm. And

Sierra 33:37

I feel like a let, it's like a nice, like let go. When I think about that, it's like that's the wisdom to tell the difference for me

Tre 33:43

because you focus on the what you cannot change.

Sierra 33:46

Yes. And I really,

Tre 33:47

I cannot change this, so I should relax.

Sierra 33:49

I'm like, how can I change it though? Yeah. And

Tre 33:51

it's

Sierra 33:51

like, no, you

Tre 33:52

can't. This is something that you can't change. Okay. So I can, because I view it from the other other direction, which is like, oh, this is something I can change. Yeah. That's so empowering that I can impact this. Yeah.'cause this is something I can change. I can do something about it. Yeah. Interesting. That's

Sierra 34:07

interesting. Me always being so negative. Interesting. You're like, yes, I can do it. I'm like, finally, I don't have to do it. it. Let it go.

Tre 34:19

Interesting.

Sierra 34:20

Yeah. That is interesting to

Tre 34:21

see if, sorry, I completely interrupted there.

Sierra 34:23

No, no, that's okay.'cause I. I feel like maybe it, that reminds me of our conversation this morning. Does anybody have a favorite direction on the compass? Just a quick question for the listeners. I'm leaving it there, but if you do, feel free to comment. Um, okay. Anyways, so the affective forecasting is like. Uh, pretty much that. So a lot of times people in this paper specifically, it talks about changeable outcomes. So the study was, I, I, I might be like a little bit off, but it was basically saying about a photography class or like thing where people had the choice of like, they were going to pick a picture to print. and One group was able to change their choice.

Tre 35:15

Okay.

Sierra 35:16

And one group was not. It was like once they chose, that's it. That's being printed. And the group across the board that had their choice solidified was happier with the outcome than the,

Tre 35:29

because they didn't have the ability to change along the way.

Sierra 35:31

Yeah. So the other group,

Tre 35:32

the perception of choice.

Sierra 35:33

Yeah. So the other group was like, some people did change, like their um. Choice of the picture and stuff, but they were still less satisfied when the print came.

Tre 35:44

Yeah. I was talking to a, a professor at the U of S about that.

Sierra 35:49

Oh, okay.

Tre 35:50

And they said, um, they said something very similar where they, they said that a lot of people think that they want more choice, but the reality is that you don't, we, we, um. And the like. The materialism pres on that. It's like you go to the market, the store and you see 50 different types of shampoo. It's like, no. What you really want is somebody to tell you the right one that you should pick.

Sierra 36:16

Yeah.

Tre 36:16

And that'd be it, right? Nobody actually wants to go through 50 choices. Yeah. But that does get easier if you're an expert at shampoo.

Sierra 36:25

Yes. Okay, so that's what, that was something in here too. I can't totally remember. And I didn't write it in my notes, but I, that is a, it might be in that paper as well. Okay. Basically like having the expertise as well is a big thing.

Tre 36:40

Yeah. Because then it doesn't feel like 50 choices.

Sierra 36:42

Yes. Because you have all that background. Yeah. Knowledge bias.

Tre 36:45

Yeah.

Sierra 36:46

And so that's the other thing. So this Simon guy who I was following, who quoted this paper and I was like, oh, I'm so interested, and went and looked at the paper more. Um, he said, um, oh. I completely lost my thought. No. Why does that happen? Can somebody tell me why that happens? Like, why I'm like, oh yes. And then I started speaking and then it's just like

Tre 37:10

gone

Sierra 37:11

air in my head. Like, I don't know. It's so annoying.

Tre 37:13

But if you don't think I'm gonna tie that to finance.

Sierra 37:16

Okay. Yeah, sure.

Tre 37:17

Um, and may, may not really wealth management as a whole, mainly the investing piece is that so many people get bogged down with the decision of what exactly. Like, not, not even what you're investing in.'cause that's what I look at what you're investing in. I mean, the product that you're using to invest in whatever you're investing in. Hmm. So for example, if you had to force somebody to pick, they get,'cause they're trying to make the right decision and there's, let's say there's five Canadian. Equity funds that are very similar. Maybe they are index, they track the index, but they buy different, like one's by Vanguard, one's by RBC iShares and other one's by Horizons and one's by BMO. They will sit between the the five trying to figure out which is the best one.

Sierra 38:04

Mm-hmm.

Tre 38:05

When in reality just pick one and move on.

Sierra 38:08

Yeah.

Tre 38:08

Is there is no the best one? Yes. But if there is one that is slightly worse or slightly better, I'm gonna about to pick it out. Very, very quickly,'cause I know what I'm looking for,

Sierra 38:18

but you're the

Tre 38:18

expert. But I'm the expert. I can filter out, I understand what tracking error is. I understand. Like I understand so much more than just the wrap. And a lot of people think, oh no, I'm investing in like the BMO Canadian Equity ETF, right? It's like, no, that's like you are, that's what you're using, but you're actually just investing in. The 60 biggest companies in Canada. Mm-hmm. And the same thing that you'd be investing if you was doing here and there and there and there like, but people, because they don't understand there's so much choice that kind of like paralysis

Sierra 38:48

Yes. Analysis paralysis. Yeah. Or whatever. Exactly. Okay. I did remember what that guy said.

Tre 38:53

Okay.

Sierra 38:54

Okay. So he said that, um, Um, basically your brain has this. Almost like an automatic process that it runs through once a decision is made. And it kind of made me laugh and he's like, you're interrupting that when you have your options open.

Tre 39:11

Hmm.

Sierra 39:12

So it kind of made me laugh though, because it's true. It's almost like we tell ourselves,

Tre 39:17

but what's the process? I,

Sierra 39:19

he didn't say specifically. Okay. He, sorry. He didn't like go into detail about it, but he said, when you have your options open, you're interrupting that automatic process that your brain runs through. To make you feel happy with your decision.

Tre 39:32

Okay.

Sierra 39:32

And it made me think of like the things people say just through observation, I guess, where people are like, I didn't have any other choice, so I went like, with this, but you know what the, I actually am so happy that I made that decision because X, Y, Z, and they use like bias to tell themselves. It's like this was the right choice. You know, have you heard people say that? I don't know. Yeah,

Tre 39:53

absolutely.

Sierra 39:54

Yeah, it was just, it made me laugh thinking that there's actually like something that goes through your mind that like gives you more happiness when your options aren't open. It's like it's done and your brain's like, Ugh, I'm happy now. You know?

Tre 40:08

Interesting. Yeah.

Sierra 40:09

I have to look more into that. Or someone else can, I guess, if they want to talk about it more, but yeah, I'd have to read more about it. But there's an actual thing that your brain does. Just runs through like almost probably convincing yourself

Tre 40:22

that what you did was the right decision.

Sierra 40:23

Yeah,

Tre 40:24

I can imagine that would be good and terrible at the same time.

Sierra 40:27

Yes, for sure.

Tre 40:27

I could see so many bad things, bad way that that would be

Sierra 40:30

Oh, absolutely. Like,

Tre 40:33

but

Sierra 40:34

irreversible, irreversible decisions, I think. Make people feel better because there's less What if?

Tre 40:41

Mm-hmm.

Sierra 40:42

Remember how we talk about like running the parallel? Yeah. Lives. So it's like if you make a decision and you're like, I can't change it now, that's it. Right?

Tre 40:50

Yeah.

Sierra 40:51

So what's the point of thinking of the what ifs? Whereas it's like. Okay, I could like take it back or I could look

Tre 40:57

at do this or should I do this now? Should I, yeah.

Sierra 41:00

Then I start looking at other simulations, running those.

Tre 41:02

So what you're saying is I should find a way to lock in people's decisions as a permanent feature. Like Like I, uh, I, uh, I will lock in your investments for 25 years. You can know, change it

Sierra 41:14

or else I get your firstborn child.

Tre 41:16

Yeah. But

Sierra 41:18

does that

Tre 41:19

Rumpelstiltskin, where

Sierra 41:20

you

Tre 41:21

say Rapunzel,

Sierra 41:23

Well,

Tre 41:24

but it wasn't fairy tale. Yeah, but isn't Rapunzel the one that, didn't he get, she get duped by Rumpelstiltskin?

Sierra 41:32

No. I don't think so.

Tre 41:34

I dunno, I can't remember I can't remember.

Sierra 41:35

now. I can't. You sure? She has long hair in.

Tre 41:38

She's the really rate on hair. Yeah.

Sierra 41:39

It's like the mother knows best. You know, sometimes I say that to her. I just, okay, we're getting way off. Yeah. Come back. I'm exposing. Bring me too much.

Tre 41:48

Come back.

Sierra 41:48

Bring it back. Bring it back. I feel uncomfortable now. Just kidding. Okay. Anyways. Um, so yeah. Um, basically for that one, uh, a couple of finance examples that. I did not come up with AI helped me with was, uh, constant portfolio changes. Yeah. Like people wanting to change their portfolio all the time. Never investing and waiting for the perfect time, like timing the market.

Tre 42:18

You know, that's an interesting one because um, I find I have to not physically fight a lot of people, but it seems, well, I hope

Sierra 42:25

not. You just come around what

Tre 42:27

you do day fight people. I

Sierra 42:29

just to a

Tre 42:29

fist fight again, like the. Especially people that are new to me and come from other advisors, I notice they are, they want to make changes. Like, it's like they'll come and see me for their annual review or whatever, and it's like they are wanting a change to happen to their portfolio. Like it feels like if you're not making a change, then you're doing something, something wrong. And it's like, for the most part, it's just a basic rebalancing is what we'll be doing, but. Unless something has changed. Right. Like especially with my investment philosophy, this something has to change in your life. Mm-hmm. For things to,'cause then math and numbers aren't changing overnight. Um, but that's interesting.'cause I've, I definitely noticed that there's a few people where I'm like, it's taken a few years where I'm like, we don't have, we, like, this isn't a meeting to determine what we're changing.

Sierra 43:22

Yeah.

Tre 43:22

On the account. This is a meeting to determine what's changed with you. Otherwise we're gonna do what I expected us to do and have planned for us doing, which is just rebalancing. And like I've,

Sierra 43:34

I wonder if it makes people feel

Tre 43:36

like they're doing something. Yeah.

Sierra 43:37

Like you

Tre 43:37

should be doing something.

Sierra 43:39

Yes. And then that will make, again, it's like a pattern. Yeah. Interesting pattern that you found. Because I feel the same way I was just telling you about that red light thing. The red light therapy. I went for a facial, like this was over a year ago now, but so don't look at

2020_0416_1507 43:52

my

Tre 43:52

skin, rely on you. And they just had to sit there and you're like,

Sierra 43:55

what? I know. I'm like, what am I paying for? Like, nothing's happening. But then after I'm like, my skin looks great. So obviously it did something, but it didn't. It is like, usually I'm like, oh,

Tre 44:03

need to feel like you're

Sierra 44:04

doing something. I'm like, somebody do something. This light shining on my face isn't doing anything anyway.

Tre 44:09

Yeah,

Sierra 44:09

same idea. Um, yeah. A couple more. Were, uh, delaying retirement decisions and cash hoarding in a corporation. Like holding onto it.'cause it's like, oh, I don't know what to do with the cash, so I'm just gonna hold onto it. I it

Tre 44:20

all time. Yeah.

Sierra 44:21

So, or it's like, oh, if I invest it, like what if, what if, what if the ring is what ifs? It's like I wanna have their, they wanna have their option open.

Tre 44:29

Yeah.

Sierra 44:29

But it's not actually good for them.

Tre 44:31

No, not at all. And, and a lot of people, again, it comes back to financial literacy.'cause a lot of people, and I, I try to get, there'll be people that will listen to this and I'll be like, he's told me that so many times where I'm like, the money isn't gone. It's not just because you're taking it like you're recording cash. You can take money out of your TFSA and they're like, well, I, I tried to think about it that like, that's money for later. I shouldn't be taking it. I'm like, no, do not think of it like that because it will mean that you will not invest enough.

Sierra 45:00

Yeah.

Tre 45:00

If you are never having to go into your TFSA for all of your purchases. You have too much cash. If, if a, if a, if a, a purchase that costs like 10% of your income comes along and you can just afford to go to your bank account and pay for it, you have too much cash. Yeah. Like that is an obscene amount, cash, especially for a

Sierra 45:21

corporation

Tre 45:22

to, to, to keep hold of. Um, yeah. But

Sierra 45:26

yeah,

Tre 45:27

it makes people feel better. I like, I would much rather, I'm

Sierra 45:29

definitely that person.

Tre 45:30

Yeah. I'd much rather it's not a problem for you to come back to me and say. Send me an email and call me and say, Hey, send me 20 grand. Like, cool, great. I'm expecting that. What I'm not expecting is when we meet you'd be like,

Sierra 45:44

sorry, I'm having a couple of more thoughts about

Tre 45:46

that though actually reminded me after I reply to a client that

Sierra 45:49

I feel like this episode is like a little bit, this is actually how we talk though. It's like you'll say something and I'm like, oh, like spurs something on and then we talk forever about things. But I also, I also wonder if having. Yeah. Again, it's like I, I always think about like, what's really going on here? You know, me, I like, people can say things, but I'm looking at the deeper meaning, like reading between the lines, what even maybe they don't understand what's happening and I wonder if people are like. They wanna hold cash because it makes them feel more in control. It's like they don't have to talk to you about any decision.

Tre 46:25

I have also ran into that as well. I had, yeah. Um, not that often, but it does come up every once in a while.'cause I was working with somebody, they just retired and I think this might be a retirement transition as well, but we would, I'll try to work on holding less cash just because if we want it in a savings account, I can put it in a savings account that's gonna earn twice, three times what? They would earn on retail side. Yeah. So I was like, okay, let's keep a reasonable amount. And they made the comment, well, they don't want to feel like a child coming and asking for, for money. I was like, okay. I, I guess that's not the way I see it. Like, it's like, I don't wanna come asking you. It's not, it's just like giving me an instruction, but I get that from, from it. Yeah. Like there's, I can't, yeah. I can't really do anything about that somehow. I dunno.

Sierra 47:12

Well, you have to come to me, child. I'm just kidding.

Tre 47:15

Like, that's not the way I see it or how it is. It's just, it's just like,

Sierra 47:19

because it's almost like you, I wonder if they feel like, oh, he's gonna question me. Or like, because this used to happen even as a teller at the bank, people would be like, they would be like, I need$20,000 outta my account. And you're like, I like as a teller. When it comes to things,

Tre 47:35

well, you have to for,

Sierra 47:36

you have to money

Tre 47:37

laundering and stuff like that.

Sierra 47:38

Yeah. I'm like, am I allowed to? Like for fraud reasons, basically. Yeah. You need to, I don't care what you're doing, I

Tre 47:45

just need, as long as you don't say I'm gonna buy a kilo of cocaine, like that's about like,

Sierra 47:50

or or like, oh, someone I met online needs this money immediately. It's like, okay, I am trying to protect you.

Tre 47:57

Yeah. I need to turn it into Apple gift cards to, okay, well let's have a conversation about this.

Sierra 48:02

My, I'm a Nigerian prince. I found out recently, it's like you're a girl. Awesome. Um, anyways, yeah, so that, it just made me think of that like there might be even more to it kind of around this similar idea. Like there's so much, I think people just disregard like the psychological impact of decisions a lot of the time. Like Like from how we started it basically, like, I'm well in, in, I have good intentions, so I'm gonna make good decisions. And it's like there are so much else that goes into. Uh, how we think and how we decide things and like, yeah, this is tied to money, but it's in everything. Like sometimes people make decisions and you're like, what were you thinking? And even they will be like, I have no idea what I was, that was so unlike me. Or,

Tre 48:52

but a lot of it, I think I still come back to like not people not thinking about the decisions that they're making ahead of time.

Sierra 48:57

Yes.

Tre 48:58

Because I would say that's something that you and I both do very well.

Sierra 49:02

Mm-hmm.

Tre 49:02

And it's become very evident with raising Aria is that. A lot. Like so far it's not been a surprise. Like stuff hasn't been a surprise.

Sierra 49:12

Yeah.

Tre 49:12

Because we have thought about how we're going to act in certain situations beforehand. Yeah. And then, yeah, you feel a certain way, but you make sure that you act.'cause you've already done it. Right? It's like the role play. Like we've, you've already role played it in your head with each other. Like, this is how we're gonna act and this, this is what we're gonna do in this situation.

Sierra 49:29

Yeah.

Tre 49:30

So it's like, the first tantrum she had was not a surprise to us where we were there. Like, how do we, how are we gonna react to her? Yeah. We simply threw out the car.

Sierra 49:41

Oh man, you're on fire today. You're cracking me up anyways. Um, yeah, so we'll wrap this episode up now'cause it's probably pretty long. I'm like, I haven't been looking at the time, but it feels like it might be a little bit on the long.

Tre 49:56

52 minutes.

Sierra 49:57

Okay. It's long, so bad, but

Tre 49:58

it's not bad. It's long. It's so bad. I think we've done long ones, so it's okay.

Sierra 50:03

I'm like, I'm just nervous

Tre 50:04

and this is great. I'm, we should do more like this. Like,

Sierra 50:07

I'm like, this is stressful.

Tre 50:08

You exhausted? Yeah.

Sierra 50:09

I'm tired. I'm like, did I get the guy's name right? Did I some guy from Massachusetts.

Tre 50:16

This is great. I, I think we should do every other episode. Oh, course you do. Every other one. I do. Every other one.

Sierra 50:21

No, everyone calls this Tre's podcast. So like I'm Chop

Tre 50:24

Liver. No, it becomes No exactly. So if you did more, I get a break. I don't have to do,

Sierra 50:31

no. We'll let the people decide. I'm just kidding. I'm joking. Don't, please don't, don't say anything. Just it's Tre's podcast. Anyways, okay, let's wrap it up. So the like conclusion is pre-deciding rules before emotions arise.

Tre 50:51

Mm-hmm.

Sierra 50:51

That's like a good rule of thumb. So. I think about like even wills and things like that. Some people don't like talking about that.

Tre 50:59

Absolutely. Yeah.

Sierra 50:59

It's like you and the people you love are going to die. I feel like that's gonna be

Tre 51:06

death is I,

Sierra 51:06

it's inevitable. I mean, that sounds dark,

Tre 51:08

man. I'm thinking, there's so many, somebody asked me that, they're like, are you out of ideas for the podcast? And I'm like, no. I actually have a huge list that we haven't got through half of them. And I keep adding more to the list. So I was at the Estate Planning Council for Saskatchewan. There was somebody that was a like a. She helped people through the process of dying. Mm-hmm. Like, um, and planning for the, for a funeral for somebody and all that stuff. Like a, kind of like a grief counselor, but more focused on the person that's actually dying. Yeah. Um, and she said, uh, there's nothing more human than death. Yeah. It was a very, like, I'd never really heard it put that way, but yeah. That is like, that is kind of.

Sierra 51:52

It's

Tre 51:52

like happen. That's what we see happen. That's what happen. That's need, that's everything we know. We, we we is like we, that's what we know is,

Sierra 52:00

yeah,

Tre 52:01

is, is death. So planning and preparing for it and even openly talking about it.'cause she made the comment that people, like, she was like as,'cause it was mainly, mainly lawyers and stuff. Um, but she made a comment that you should use the word death and dead and dying and shouldn't use. They're passing on or like things like that. She was like, use the words, use the proper words. Yeah. Like, yeah. It was interesting. Anyway.

Sierra 52:30

Hmm.

Tre 52:30

Could do a whole lot of podcast on

Sierra 52:32

that

Tre 52:32

stuff, but

Sierra 52:32

yeah. I would be interested

Tre 52:34

Yeah.

Sierra 52:34

In that. Um, but yeah, that, like, that to me, that popped into my head is like, people might not like talking about it, the emotional state, like getting into it. It's like, I don't even want to go there. I've heard people say that. Mm-hmm. I don't even want to think about it. It's like, okay. But that. Is going to happen. We don't know how or when or whatever. So it's like, let's prepare so that when you're in that hot physiological state,

Tre 52:58

you know what you're doing.

Sierra 52:59

You're gonna make better decisions. Yeah. You're helping your future self and I think people are, are kind of bad at. Yeah. Even that or they're overestimating what their future self can handle, which is the wrong forecast, everyone. We talked about that too. Mm-hmm. Okay. And then, um, automate good behavior. So that was a tip. Um,

Tre 53:18

that's my, that's my host.

Sierra 53:20

So that is a tip not from Tré. Every time

Tre 53:23

Well is, no, this is reaffirming that. My whole thing is systematize what you can to give yourself the best chance of success. Yeah. Because for constantly making these decisions. Is is exhausting and there's better decisions. Like I truly feel like, for me anyway, it's very true that I only have the capacity for a certain amount of choices and decisions and stuff a day.

Sierra 53:44

Mm-hmm.

Tre 53:45

And that's echoed through a lot of very high performing individuals. It's like you cut back on the small decisions because it's still a decision that has to be made and it's exhausting and that, and that gives you the ability to focus on and make more decisions in more impactful areas. Yeah, I think that is one of them, especially when it comes to finances where. If you can automate the easy stuff, if it gives you the ability, like I, I delve, I do a lot of on the tax planning side, which is way more advanced and way harder to do and way harder to stick to and lots of other stuff. It's way harder to do. But that's where you can make a huge, huge difference.

Sierra 54:19

Mm-hmm.

Tre 54:20

But only if everything else, imagine trying to make all the decisions for all the easy stuff and add all that onto it. It makes it so much harder. But

Sierra 54:28

yeah.

Tre 54:29

Sorry, I keep.

Sierra 54:30

No, that's fair. Yeah, I completely agree. And so does my notes automate. And then the last like thought, I guess that I had kind of like jotted down was, um, you can't rely on your future self to be disciplined or become disciplined under pressure.

Tre 54:55

Mm-hmm. So it's

Sierra 54:56

like that is the. that is the, It's, it's like saying

Tre 54:59

you have to be disciplined now

Sierra 55:01

so that when

Tre 55:02

that happens,

Sierra 55:03

you have a more likely outcome of making those good decisions. Because saying like, oh, I'll figure it out when I'm in that like terrible state and everything's like wrong and on fire, whatever. It's like you're not going to make good decisions in that state of mind.

Tre 55:17

Mm-hmm.

Sierra 55:19

I expecting that of your future self is a recipe for disaster.

Tre 55:23

Mm-hmm.

Sierra 55:23

So anyways. That's my episode. I hope it was okay, and I can link the studies

Tre 55:31

Any show notes and

Sierra 55:32

in the show notes and stuff in the show notes and people can read and. I dunno, do their own research or just take me for face value of what I've said that that's fine too.

Tre 55:42

Oh, you're just George on the internet. So

Sierra 55:43

George, George, he he knew some stuff.

Tre 55:49

Some random person.

Sierra 55:50

Some guy named George. Yeah, Yeah, some guy named Daniel, old

Tre 55:54

George.

Sierra 55:54

And some girl from, oh, some girl named Jane. Yeah, that's what,

Tre 55:58

cool. Good, good. Yeah.

Sierra 56:00

Anyways, that's the end of the episode, so we will see you in the next one.

Tre 56:05

Thanks for watching. Thanks for listening.

Sierra 56:07

Bye.

Tre 56:08

Bye

Speaker 56:08

Thanks for listening to this episode of the Plain English Finance Podcast. Tre Bynoe certified Financial Planner. Chartered Investment Manager is a financial planner with TCU Wealth Management and Aviso wealth. You should always consult with your financial, legal, and tax advisors before making changes. This podcast is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell at any securities. The views expressed are those of the individual and are not necessarily those of Aviso Financial Inc. Mutual funds and other securities offered through Aviso wealth, a division of Aviso Financial, Inc.