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Robin Powell: Sometimes the best way to explain a simple but important concept is to illustrate it. And no one understands that better than Carl Richards. A former financial adviser, Carl now works with other advisers on managing their clients’ behaviour.
Carl is well known for his sketches, and one of his most popular is one that helps clients to focus on what really matters. It was a conversation with his mother that gave him the idea.
Carl Richards: She sits down and says “Oh nothing” and I said “No really what’s wrong?”, she said “Oh the dollar. I’m just so worried about the dollar.” At this
Robin Powell: Focusing on this intersection of what matters and what you can control is useful in life generally and not just when it comes to investing. It can save you a great deal of time and unnecessary worry.
Carl Richards: The good news with investing and particularly if you think more about wealth management in general like more broadly than just investing, is if you were to make a list of all the things that actually mattered, most of the things we have control over. Asset allocation, our behaviour, when we retire… There is a whole long list of things we have control over.
There is one noticeable thing that matters a lot that we have no control over and that’s our return. In other words, the markets. We spend 80% of our time talking and worrying about one thing and I am just suggesting that we should maybe flip that a little bit. It does not mean ignore that thing, I am just saying why don’t we spend a little bit more time talking about the things that we do have control over that also matter?
Robin Powell: Thank you to Carl Richards. You’ll find plenty more helpful sketches like that one on his website, BehaviorGap.com.