I fly a lot—averaging about three times a week. Recently, though, I had the rare experience of being a passenger on four flights in a single day.
I’m not afraid to fly, but one of the four flights was extremely bumpy. Even a seasoned traveler can get a little freaked out during heavy turbulence, and the guy next to me looked really scared. So I asked him, “Are you okay? Are you afraid to fly?” His reply was one of the funniest comments I’ve ever heard: “My friends always make fun of me when we fly. However, I tell them, ‘I’m not afraid of flying. I’m afraid of crashing!’” Classic.
This exchange led to a very interesting conversation about why people are afraid to fly. We decided it comes down to a lack of control. Sitting in that seat on the plane, passengers have no control over what is going on. However, we made an important observation—neither one of us had any desire (or ability) to hop into the cockpit and fly the plane, but nevertheless, we still want to be able to know whether or not there is an actual problem.
One key tip for those who don’t fly very often is not to get scared until the flight attendants look scared. When they sit down and buckle up, you might have a problem. My seatmate and I came to the conclusion that it’s not actually lack of control that makes people afraid to fly, but the lack of information.
That’s when it dawned on me that this is a great metaphor for why investors need advisors, and why most investors shouldn’t invest alone. My lack of control over the plane doesn’t make me want to fly the plane, and much like volatile markets worry clients, most of them don’t react by saying, “I think I should invest my money by myself.”
End investors likely retreat into the state we experienced on the plane. They want to know what is going on, but don’t necessarily want to assume control themselves. Rather, they want to know that someone with experience is in control and can handle things for them. Similarly, I don’t expect a plane’s captain to give me a play-by-play—I just want to be sure he or she knows what they are doing and gets me to my destination safely.
In many instances, the problem for end investors isn’t a lack of information, but information overload. At a time when the end investor is overwhelmed with information, it’s easy to see why some choose to do nothing—and choosing to do nothing, while psychologically comforting, is likely a surefire way to miss out on reaching their financial goals.
I believe most clients fall into one of three categories:
- “Leave me alone. I don’t want to hear from you.”
- “Make the decisions. But tell me what you did.”
- “Check with me before you make decisions on my behalf.”
Two of the three categories above don’t have anything to do with a fear of control, but come down to effective communication.