Drowning in Data

by Noah Burns

For a lot of my career, I thought that my generation (millennials) would be more likely to handle investments themselves.  Do-it-yourself (DIY) investing isn’t exactly new, but my generation grew up in the information age.  Most DIY options rely heavily on tech platforms and internet savvy, so I figured us millennials would feel confident handling things on their own.  After all, the totality of human knowledge has always been at our fingertips, and we were taught at a young age how to effectively access this information.  This may have been hubris, because I’m now starting to believe that too much information is going to be a disservice to my peers in relation to the financial markets. 

Most of our team’s friends and clients know about our practice’s philosophy, the Successful Investor Mindset.  It consists of two core tenants:  logic over emotion and structure over prediction.  In many areas of life, too much information can cause decision paralysis, cloud our logic, and make us doubt our long-term financial planning structures.  This applies to minor decisions, major decisions, non-financial decisions, and financial decisions as well. 

Have you ever spent way too much time scrolling through Netflix struggling to make a decision?  How about spending 30 minutes in the diaper aisle because you can’t choose between Pampers, Huggies, Luvs, Honest, or the store brand?  They all have different advantages, disadvantages, prices, sizes, etc.  Too many options can be overwhelming and cause decision paralysis.  This has been proven to be true in our economy.  Now consider that there were 137,892 mutual funds available to investors in 2022!  In addition, there are 8,754 exchange traded funds (ETFs) globally.*  And there are countless ways to dissect the financial markets:  stocks, bonds, commodities, different sectors, large caps, small caps, growth, value, global, domestic, international, emerging markets, real estate, alternatives, liquid alternatives, fixed annuities, variable annuities, fixed-indexed annuities, and so much more.  Which of these should you invest in for retirement?  This breadth of potential decisions may lead to the lack of a decision, which can cause permanent damage to your portfolio and retirement.

DIYers may find themselves at a disadvantage as they are encouraged to sift through mountains of information, conflicting opinions, and financial clickbait.  Let’s take the problem of inflation as an example.  Inflation is the enemy of retirement income because it diminishes buying power over time.  Looking up how to combat inflation in your portfolio yields thousands of financial clickbait articles.  The top result when I looked it up was “9 Assets Classes for Protection Against Inflation.”  This article mentions gold, rental property, REITs, TIPS, and more.  Other articles will mention retirement distributions strategies, tax strategies, and general financial planning strategies.  Here are some questions that may arise after perusing some of the articles:
  • Which ones are worth implementing?
  • To what lengths are you willing to go to protect against inflation? 
  • What if one article disagrees with another?
  • Is this sound advice or just good marketing?
  • Are you willing to tie up your assets in something illiquid?
  • Do you understand the most effective way to own commodities?
  • Where are your assets now while you wait to make a decision?
Holy cow, that’s a lot of questions!  Side note:  I actually thought of about 10 other questions and had to narrow them down.  Now consider that diversified portfolios of stocks and bonds generally have low minimums, are easy to implement, uncomplicated from a tax perspective (especially in a retirement portfolio), liquid (at current market value), and given a long enough time horizon have historically tended to outpace inflation.  Are the thousands of articles and information dumps about inflation truly helpful to you?  Is the time you spend away from activities you enjoy worth it to you?

Here’s an excellent solution to the problem:  hire us to help guide you through this!  The financial news networks and our culture convince investors that they need to be worried about every world event reported and every financial decision.  “The media is not your friend.”  This was Robert’s favorite saying when I first joined the practice ten years ago.  It still has major relevance.  Our culture and the media puts pressure on investors to become investment experts or else their portfolios may suffer.  This is flawed thinking, in our opinion.  Active is not always better, and more information is not always better.  Delegating your finances might be the answer for you and your family.

Investments and retirement planning are complex issues.  When investors cave to the pressure and welcome in a glut of information, they start seeking complex solutions.  However, complex problems are often better viewed through simple frameworks.  Complex solutions are also sometimes best handled by professionals.  Can I follow a YouTube instructional video on how to properly daisy chain the outlets in my daughter’s bedroom?  Yeah, but it would probably take 12 hours, several curse words, and $100.  Instead, I hired a handyman service and paid them $200 to have it done in 60 minutes.

Simple is often also easier to trust, which is hugely important when it comes to sticking to the structure of your financial plan.  Putting a plan or structure in place is only half the battle.  Once you have financial structures, it’s important to stand by them unless there are significant changes to your financial circumstances.  We say “the plan is in place, now it’s time to let the world turn.”

So where does that leave our readers?  If you’re a staunch do-it-yourselfer, then beware of overcomplicating your plans, possibly diluting your strategies, and inviting too much information.  Are you on the fence of hiring a financial advisor?  Meet with us!  We offer a lot of our time upfront before you commit to us, as we are fully focused on developing long-term relationships to benefit the clients.  If you’re already a client, then great!  I give all our clients permission to sit on the beach, sip a cold beverage, ignore the noise, or call us with any concerns.

Our Core Value: Life Is About Experiences and Relationships

A financial advisor’s income tends to go down if assets are spent, so a lot of advisors discourage client spending as much as possible.  Not us.  There are a few of our clients out there that we are begging to take a nice vacation or give to their favorite causes.  You are the ones that built this spending muscle, but frequently you need a big nudge to flex it. 

We really believe in our core value, and we hope your life’s experiences and relationships are bettered by a relationship with us.  Convincing you to actually spend your hard-earned money is part of that.  It’s unnatural for people that have spent 40 years building wealth to spend it down at all, so don’t feel bad. 

How do we encourage more spending?  It usually starts with an analysis of your distribution rate or an update to your retirement projections.  If the math checks out, then we will be happy to support a trip, a charitable donation, or an extra gift to your heirs.  If the math does not check out, you will now have renewed motivation to take steps to ensure your financial independence. 

If you want us to re-run your retirement projections, please call us and set up an appointment with Noah.

*Source:  Statista Research Department, 2022
Diversification does not ensure a profit or protect against loss.  Past performance is no guarantee of future results.

Family Update: Welcome Juniper!

Speaking of experiences and relationships … there’s a new Burns baby!  My incredible wife, Nicolette, gave birth to our beautiful new daughter in early August.  Way to go, Nicolette!  Our daughter, Juniper Eloise Burns, is strong, happy, a little chunky, and a lot of fun.  All of us are so grateful for the congratulations and well-wishes we have received from all of you.  I’m also grateful for your patience as I took a few weeks off and eased back into work.  Please enjoy these photos of the happy family and new addition!