“‘Jerry,’ my 65-year-old father, is beating himself up over failing to get out of the stock market months ago when it was so high. He is obsessed with making money and now consumed with regret and guilt. He has always been impulsive, not wanting to miss out on a hot stock, and I am afraid now he is vulnerable to making a wrong decision to get back what he lost. Dad is becoming a stranger to the family. We have told him for years to work with a financial adviser, but he is a know-it-all.
“Do you know of anything he can read which might help him feel less angry with himself over his decisions and encourage him to work with a financial adviser? Thanks, ‘Liz.’”
I certainly do. The Power of Regret: How Looking Backward Moves Us Forward by New York Times bestselling author Daniel Pink (published this year), and Your Total Wealth: The Heart and Soul of Financial Literacy by Lyle Sussman and David A. Dubofsky (published last year).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
When I Say the Word Regret, What Comes to Mind?
Think about some of the things you’ve regretted and how things today might have been different if what happened back then didn’t. Or, if instead of doing something, you held back.
Was it that person you so wanted to meet, something — a feeling — came over you that this just might be the one? But you didn’t take that step forward, didn’t say, “Hi,” and instead moved on with your life, wondering, always wondering what might have been?
Pink made clear during an interview with me that an understanding of what we regret can open doors to a better, more secure tomorrow — especially in a confused financial world.
He describes four categories of regret that are universal — people all over the world have these same regrets that have special applicability to financial planning.
- Foundation regrets. These are failures to be responsible, conscientious, prudent, and they leave you thinking, “If only I had done the work.” A lot of finance- and health-related regrets are in this category.
- Boldness regrets (inaction). These include opportunities not taken, such as applying to medical school, starting a business, “chasing” a true love. They leave us thinking, “If only I had taken that chance.”
- Moral regrets. These leave you wondering, “If only I had done the right thing.”
- Connection regrets. These regrets happen when we neglect the people who matter to us: “If only I had reached out.”
How Being Aware of Our Regrets Helps Us
“Our regrets are a great source of information and part of who we are,” Pink says. “They can be helpful when, for example, business leaders say to their teams, ‘Here is what I regret about where we are and what we need to discuss.’ This candor earns that person respect and positive change for the organization.”
Avoiding Financial Regret in the First Place
If, when Jerry was about 25 or 30, someone had given him a copy of Your Total Wealth: The Heart and Soul of Financial Literacy, and he had taken the authors’ advice to heart, I would not have this story to write.
But, of course, it only came out in early 2021.
A theme runs through the book that applies to so many people obsessed with seeing their portfolios go up in value. Sussman tells us, “It is a simple truth; you can minimize financial regret and guilt by understanding the cost of obsessively focusing on monetary wealth.”
Dubofsky adds, “If you are consumed by making money, and greed, you lose family, self-esteem, happiness. These things often become unintended consequences of acquiring financial wealth.”
Suffering from FOMO
Sussman sees Jerry as the poster child for FOMO. “Liz describes her father as someone with an almost pathologic fear of missing out — that’s FOMO,” Sussman says. “When the stock market was going up, acting on the tips he got combined with his own FOMO issues, he made money.
“Now, Jerry is at great risk for getting on the bandwagon of some stock that is hyped as helping investors recover their losses. He admits to suffering financial regret, which essentially is someone saying, ‘I should have done something with my money that I did not, and therefore, I am missing out on something I should have had.’
“He is in an extremely dangerous situation.”
How a Financial Adviser Can Help
“Financial advisers help us deal with uncertainty, and the best advisers are skilled with finance and psychology, helping their clients achieve financial stability. That’s what a good financial plan does,” Dubofsky points out. “A growing group of advisers are in the ‘protection business’ and focus on clients who are vulnerable to being scammed. They build firewalls between a client’s portfolio and their poor investment decisions. The objective is to make sure that the portfolio isn’t going to be drained.”
A Prescription to Sleep Better
The authors suggest these steps for families to take during scary financial times:
- If adult children are financially savvy, they need to be aware of what Mom and Dad are doing.
- Increase your due diligence. FOMO is very powerful and invites taking financial risks that will break your heart and your portfolio.
- Have a long-term perspective.
- Remember that this country has survived a lot of bad calamities in its 200-plus years of existence.
- Keep in mind that companies will always figure out how to make money.
- If you have a long-term horizon before you retire — 20 years or more — don’t sell right now and even consider buying.
- Exercise caution if you have a five-year horizon. Buying now could be more problematic.
Especially now, both of these books are relevant, practical and so helpful. Also, each is a great read!
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
-
Why Uber Stock Is Volatile After GM's Cruise AnnouncementUber stock is swinging this week following news that General Motors is restructuring its Cruise unit. Here's what you need to know.
-
UnitedHealth Stock Falls as Lawmakers Eye Insurers, PBMsUnitedHealth stock is continuing to fall Thursday after the introduction of bipartisan legislation targeting PBMs and healthcare giants. Here's what to know.
-
Three Possible Tax Impacts for Retirees Under TrumpHow might a second Trump term affect your tax bill in retirement — or the inheritance tax bill for your heirs? This pro has three predictions.
-
What to Know About Leverage and Bitcoin's Meteoric RiseLeverage in the financial world can lead to astonishing success or a crushing collapse. How are investors using leverage to invest in bitcoin?
-
How Do You Know When It's Time to Change Financial Advisers?Sometimes a breakup is for the best. Here's how to handle 'the talk' and make the switch to a new professional who's a better fit for you.
-
The Best Ways to Use Your Year-End Bonus (and the Worst)'National Lampoon's Christmas Vacation' shouldn't be anyone's go-to for financial advice, but it does remind us how not to spend a holiday bonus.
-
LLCs: Power Tools That Can Create Big ProblemsForming an LLC for your business might seem like a straightforward endeavor, but if you don't know exactly what you're doing, trouble could follow.
-
Never Talk About Money? For Women, That Can Spell DisasterHow can you plan for retirement when your husband holds the purse strings and talking about money is taboo? Help is at hand for this common problem for women.
-
How Combining Your Home Equity and IRA Can Supercharge Your RetirementWhile many retirees own an IRA and a home, very few are considering how they could work together in a plan for retirement income.
-
The Six Estate Planning Steps Every Blended Family Must TakeWhether your blended family is newly formed or fully fledged, use these six steps to review your estate plans now and lower the risk of conflict in the future.
