Are You Attracted to “Do Something” When “Doing Nothing” is Best?

Whenever you have some type of discomfort or pain, it’s only natural to look for a solution. Perhaps you have a toothache and want the dentist to “do something.” What if “doing nothing” is a better path?

This happened to me a couple years ago, and the dentist said I was just congested and sinus pressure was causing the discomfort. No issues with my teeth per se. She opted to “do nothing” and a day or two later she was proven right.

Avoid Knee-jerk Reactions in Finance

The realm of personal finance is much the same. Financial advisors sometimes think it’s better to respond to client concerns by “doing something,” when the best advice might be to “do nothing.”

Don’t misunderstand. I’m not advocating the status quo or inertia. That might be an easy, emotionally comfortable place for you, but it can also make it difficult to execute action steps when really needed.

Why We Feel Compelled to Act

The problem is, particularly within the fields of health and wealth, people want immediate response and action. Oftentimes, that’s not in your best interest.

The reasons many physicians, dentists, lawyers, and financial advisors often say, “do something” mostly revolves around incentives. All of these systems are arranged to nudge professionals toward “doing something,” even when “doing nothing” sometimes is just as good. More tests, more procedures or more trades don’t necessarily produce better outcomes for you.

Finding the Right Financial Advisor

Focusing on financial advisors more specifically, there’s a big difference between technical competence and effective communication. What you want is an advisor who has both. You need someone who can distill your most important long-term aspirations and then manage your expectations along the way. Someone who can help you take steps when needed, but stay put when that’s best.

What you don’t want is an advisor who reacts to every bump in the road. In essence, you want a financial advisor with a long-term perspective. That’s one big reason for hiring an advisor. You need someone who isn’t you.

My experience informs me that in most cases, the real underlying issue is whether you consider yourself a long-term investor or a speculator. Many investors say they have a long-term focus, but in reality are always looking to “do something” in response to something short-term. Where do you honestly see yourself?

Are You Driving Your Decisions?

Warren Buffett says that how well you manage this distinction between speculation and investing comes down to your “inner scorecard” versus your “outer scorecard.” That is, are you truly investing for your particular goals, or are others around you, like friends, and colleagues, influencing your investing decisions?

The driving force behind your decisions, financial and otherwise, is your imagination. You imagine what will happen as a consequence of the decision and this may or may not mirror reality. The important thing to remember is that your imagination is much more powerful than logic or reason. It overwhelms your perspective and view of life.

The next time you have the itch to “do something,” take a step back to examine why. Are you reacting to some short-term concern, or are you actually taking constructive steps toward your long-term financial goals. Start there. Ready for a real conversation?

Disclosure

Apollon Wealth Management, LLC dba J.E. Wilson (Apollon) is an investment advisor registered with the SEC. This document is intended for the exclusive use of clients or prospective clients of Apollon. Any dissemination or distribution is strictly prohibited. Information provided in this document is for informational and/or educational purposes only and is not, in any way, to be considered investment advice nor a recommendation of any investment product or service. Advice may only be provided after entering into an engagement agreement and providing Apollon with all requested background and account information. Please visit our website https://apollonwealthmanagement.com for other important disclosures.