The Financial Decision-Making Lifespan

Most of you reading this article can point to times in your past when you were less mature and more erratic in your decision-making.  If you have successfully forgotten your most regrettable decisions in life and finances, then likely you have had an adult child or grandchild make a few doozie decisions!  Dawn and I have several children in their twenties!

One fascinating and frustrating aspect of my work has not changed in my 28 years as a financial professional.  When it comes to people’s money, logic and maturity can vanish in an instant.  Too many people are distracted by numbers, rate of return, daily stock market results and not taking a mature, logical approach toward their objectives.  I’ve spoken to and consulted 100s of independent financial advisors in the past decade and probably the favorite quote I share is; “It’s our job to do what’s in the best interest of our client, that our client will allow us to do.”

As a Fiduciary advisor, I make recommendations that are in the best interest of my clients.  However, if a client has a bias, an irrational fear, or has a need to understand that exceeds their capacity to understand, then my recommendation will represent what is in the client’s best interest within the limited framework the client provides.  A more direct way of describing the last sentence would be that it can be challenging for me to keep a client from getting in their own way!

In life, we could probably divide our lifespan up in three stages.  (A) The journey from childhood to adulthood.  Sometimes people get mentally stuck in childhood but are then faced with adult decisions.  This stage is loaded with decisions which appear naïve, idealistic, impetuous, and illogical.  (B) The Working years, often accompanied by raising a family.  This is where we expect our children to be more responsible than we were.  So that we avoid the “do as I say, not as I do” dilemma, we are likely more deliberate and “mature” in our own decision-making.  (C) Lastly, the Retirement years when we are what we are.  Your knowledge base in life and finances is just about in stone.  Experience, good and especially bad, has shaped your worldview.  Your decisions are less prone to emotional whims and you wear a “Wisdom badge” in your family as you are asked questions by those in stage B & C.  While many follow this progression, we all know people that are mentally in a different stage than their age would suggest!

Well there are three stages in the financial decision-making lifespan.  However, greed and the human desire to get a “better deal” can turn otherwise sage people in to money adolescents in the blink of an eye!  People of all ages fall in to and out of these stages.


Speculation occurs most often when emotion becomes the primary driver of decisions.  Speculation is reacting to headlines and world events.  Speculation is buying a stock for reasons such as: friend recommended; company you work for; media hype or commercials; great dividend yield; company has a great product.  A great company today doesn’t mean their stock is a great buy at today’s price.  Speculation is a magnet for the ”better deal” crowd!


Investing is very different than speculating.  Investing is a deliberate strategy done for the long term.  Long term would be at least five years and more likely ten years and beyond.  Investing is about time frame, objectives and growth of your money.  World events and economic gyrations will occur and are not predictable, therefore do not substantially alter investing strategies.  For every hot stock tip, there’s a stock failure.  Investors are not rattled by the daily noise of markets and media.


Speculating might as well be gambling, which can be fun with some of your money.  Investing is very numbers-oriented relating to inputs and outputs.  Successful investing is important to successful planning and should be logical, disciplined and consistently reviewed over a long-term time frame.  Planning seeks to eliminate speculation, harness the growth of successful long-term investing, and be strategic about an individual’s unique purpose for their money.  Effective planning is about the efficient use of your money, not the growth of your money.  Where investing is one dimensional, planning is multidimensional.

Think of how you plan a vacation.  You start with where you want to go and why you want to go there before you consider how.  The where and why is your objective or purpose!  You then consider various alternatives in travel, accommodations, scheduling, etc.  You consider potential pitfalls and how you might adjust for them.  For most Americans, we spend more time and effort planning our vacations than planning our financial success.

You are the expert on your “Where” and “Why.” We are the expert on your best “How.” Say hello to our Delightful Anna at 866-486-4947 (toll-free), ext.289 and she’ll schedule time for us to get better acquainted.