Ep #166 - Maximizing Your Life vs. Maximizing Your Wealth

[00:00:00] Ben Haas: Hi everyone, and welcome to AB Conversations, where we will help you CFP your way out of it. A podcast where you get into the minds of a couple certified financial planners on how we think and feel about everyday financial planning questions, and what should really matter most to you. A healthier financial life starts now. 

So today we're gonna start with what, what we'll call the world's easiest client survey, and that is to say, you've, they've... If we asked all our clients, let's just say 100 clients, we gave them the option, would you rather maximize your life, however they define that, or maximize their wealth, and you can only choose one, which would you choose? 

I'm willing to bet that 100% of our clients would choose to maximize their life. Like- Okay ... clearly this is a little tongue in cheek. Uh. But I, I think we're gonna guess... Go ahead.  

[00:01:01] Adam Werner: Sorry. I'm gonna make a joke. It's like f- this is the one question on Family Feud where there's only one answer on the board. 

[00:01:09] Ben Haas: Well, so maybe this is gonna prove the point, right? We're really stacking the cards here, but what I think is gonna be interesting about this is clearly that's not how some people are wired to think when they've been savers their whole life. So there is sometimes this disconnect between I wanna maximize my life, but I wanna maximize my wealth, and now I'm, I'm twisted in knots. 

So the whole point of bringing this up, right, this faux survey, is let's digest this, and how do we as advisors kinda help people tackle this, this seemingly, like, tug of war between I know I need to save this money, but gosh, I really want it to like serve me and what I wanna do in life and the people around me. 

[00:01:51] Adam Werner: Yeah. So in case I cut you off before you even made, made the point, the survey being if we asked 100 clients would they rather maximize their wealth or maximize their life, we would assume everyone's gonna choose, "Well, I'm gonna maximize my life." The wealth is just a part that allows me to live the life that I wanna live. 

So yeah, I buy that completely, 'cause it's very easy for us to, to measure the financial, like the numbers. We can measure, okay, I'm headed in the right direction. I'm growing my wealth. It's... I don't know that it's impossible, but it's really hard to quantify those intangible impacts, the quality of life- Right, right 

things, right? The how am I spending my time? And you know, we've talked about this in the past too, just- Well, just what, what is enough, right? I know we've talked about that in many different instances, and I think some people that we work with need a little bit of guidance around finding that for themselves. 

Right. Yeah, sure. You know, a lot of people have an idea, but it's without the proper context and maybe understanding if I pull this lever, then, you know, there's other dominoes that are gonna fall after that. You know, finding what that enough is can then lead to maybe some more comfort on, okay, well, I don't... 

I maybe I don't feel the need to just maximize everything at this stage. I'm okay to pull back, but focus my energies elsewhere. You know, the, the, the saying or, or I'd imagine nobody comes to us with, you know, the thought of my, my goal for my life is just to accumulate as much as possible, you know, and, and die, die with as much as I possibly can. 

Yeah.  

[00:03:28] Ben Haas: Right.  

[00:03:28] Adam Werner: Yet oftentimes, I'm thinking of a couple different young clients that we've talked to recently, that's the default behavior because that is, we know that more is better over time when it comes to, "I'd rather have more than enough than not enough." So it just becomes kind of that driving force behind their financial lives is, "I'm just gonna focus on more, and at some point it's gonna be enough, but I don't-- if I don't know what enough is, then I'm just gonna keep doing more because that's my default." 

[00:03:57] Ben Haas: Yeah, hard to not be thinking about a conversation we had with some new clients in the office not that long ago, earlier today, to be more specific. And, you know, you- we're starting the, the beginning of this relationship, and, and that's really where the planning was supposed to start. Like, "Hey, I got this stressful job. 

At what point can I just start to, to phase out of this?" And here she is thinking, "All right, then walk me through today, like, what we're doing today, where is that gonna lead us to?" And his immediate follow-up to that is, "Yeah, but what makes that better?" And maybe that's kind of proving your point of, I think when we say maximizing life, like, what does that actually mean? 

What we're trying to say is the beginning of this planning process really needs to be around values and, and why people would care to be accumulating in the first place, right? 'Cause it's not to just see money grow and grow and grow. It has to be leading to some sort of then benefit from that. Like, how, what are we turning this money into? 

So I think when we say maximizing life and trying to maybe push back on a little bit of, "Well, yeah, but what makes this better?" Him asking that question, it was to circle right back around for him. Look, but you don't, you don't wanna be continuing to accumulate 'cause the only way you're doing that is by continuing to earn these paychecks that you say is really taking a lot away from your life. 

The, the time that it takes with work while your daughter's still young, the stress that it puts on you, the, the emails that you're answering late at night and early in the morning, right? So I think when we say maximizing life, it's trying to understand the values so that we can actually put some definition around what is this money supposed to be doing for us? 

What is it giving us back? Whether that's time, experiences. Mm-hmm. I'm sure we could go through other examples.  

[00:05:36] Adam Werner: Yeah. No, I, I, I think that's spot on. So- This is not my strong suit, but I'm gonna pivot there. It, it goes in then, I think, to that, the, the positive psychology. You know, we, we've talked about this whole framework of fix, fine, and flourish, and I'll, I'll just reiterate. 

For many of the relationships that we, that we have, it starts with some sort of fire to put out. There's some sort of short-term fix, right? I just need to make sure I'm on the right path. Let's fix it. Great. We've checked the boxes. Now, we probably live in that fine stage for quite a while, and for many of our retiree clients, it's getting through those first few years of retirement, just making sure I actually feel fine, content. 

[00:06:19] Ben Haas: Right.  

[00:06:20] Adam Werner: Right. And then it's, okay, what, now what is truly possible? 'Cause, 'cause I think it does all come back to Ben and Adam, you, you tell me that I, I have enough, but I don't know that I necessarily believe that, right? It's, it's kinda hard when we're talking 20, 30-year projections to, to really feel, yeah, I, I have enough. 

But the point here being, you know, just that, that positive kinda outlook on... Well, I'm gonna, I'm gonna read your note. I, I... His name is Martin Seligman. That whole idea of PERMA, it's an acronym, positive emotion, engagement, relationships, meaning, and accomplishment, as those being, like, the key drivers of fulfillment and contentment for humans in general. 

Notice wealth was not one of those in that acronym. Wealth for wealth's  

[00:07:13] Ben Haas: sake. Yeah, right.  

[00:07:15] Adam Werner: But we know, uh, you know, the whole saying money can't buy happiness, but it, it, it could help, right? Money may, money may be a tool to help out in some of those areas, but it's not, it shouldn't be the primary focus. 

[00:07:28] Ben Haas: Yeah. So that's so well said and kind of funny in its own right 'cause I, I think this is where, like, maybe we can shift then to, okay, but again, what, what does it all mean when we are in the advising seat here? And, and I'm starting to think of we're, we're so glad to have the help that we have here and new relationship with new employee who's just super good at the technical side of this work. 

Mm-hmm. And it, it really feels a little bit odd for you and I to look at some of that work sometimes and go, "Yeah, but you know what? This is where ac-academics doesn't really meet the real world." And what I mean by that is what's right for one couple may not be right for the other because what's gonna maximize wealth probably isn't gonna maximize their happiness, right? 

And I'm sure we can give different examples here, but the idea being that I, I, we-- let's use Social Security. Social Security- Mm-hmm ... like the modeling will always tell you to de- Shouldn't say always. Speaking in absolutes, don't do that, Ben. More often than not, the modeling's gonna say delay, delay, delay, because if we're assuming you're gonna live long enough, like that's how you maximize that. 

But if, if people were then sitting on the sidelines of like spending early in retirement because of that-  

[00:08:34] Adam Werner: Yeah ...  

[00:08:35] Ben Haas: then we're not maximizing- Yep ... their life, right? Just one example.  

[00:08:38] Adam Werner: Yeah. Yeah. Well, and, and in that, in that example that I know you're talking about, you know, we, the client brought this up, and we've heard about it before too, right? 

It's that the spending smile of retirement, right? There is that-  

[00:08:51] Ben Haas: Hmm ...  

[00:08:52] Adam Werner: idea. Well, and we've talked about it in, in different terms of, you know, there's the, the go-go years early in retirement, and then maybe the slow-go, and then eventually, you know, the no-go when I just, you know, my maybe my health isn't as good, I'm not as mobile, and I'm not spending as much. 

So the idea, yeah, behind what you just said, we've certainly seen that in some clients. That is, those first few years of retirement, I'm just more hesitant to spend from what feels like now it, it's a finite pool of money. I'd rather save that for later Just in case. Meanwhile, either something happens, God forbid they pass before they get to later, or they get to a point where now some of these things that they wanted to do earlier, they're not able to do for physical reasons, health reasons, probably not a monetary reason at this point because again, I think we would say now maybe they're at the point where we have the money, we wanna do this. 

[00:09:44] Ben Haas: Yeah.  

[00:09:44] Adam Werner: But now we can't physically do it, and that just, yeah, is count-counter to what we would want people to retire to and experience.  

[00:09:54] Ben Haas: Yeah. And it's, uh, I promise it's not easy for us too because for us to really encourage this idea of we're gonna maximize your life, we do have to do a good amount of planning around whatever this is for them, whatever enough is for them. 

Also recognizing, and you'll back me up on this, that that's often a moving target. Right? Yeah. How many people say, "Here's, here's what I wanna do in retirement," they get into retirement, and now they're experiencing new things, or now family has moved. There's more grandkids than I thought, and, like, my idea of what was enough may has changed. 

So going back- Mm-hmm ... to your point on fix, find, flourish- Yeah ... well, gee, that's not a linear life cycle because now we were ready to flourish, but we've got these new ideas on spending, and now we've put you right back into fix. Let's reimagine this plan. Let's fix the pieces of these puzzles again and make sure that they work. 

And I realize just, just the fear of needing to make those changes or those possibilities- Yeah ... that uncertainty of change later may make it hard for people to trust us on the front end of going-  

[00:10:52] Adam Werner: Mm-hmm ... " 

[00:10:52] Ben Haas: Look, we've calculated this. We think this is enough. We think this is enough." But it's the reality of needing to kind of balance these things over time, and I, and that's, that's the role that we need to play. 

[00:11:03] Adam Werner: Yeah. It's, it's interesting because I'll go back to your comment on just the, the academic standpoint being more focused on the black and white, you know, this being a good decision and this being a bad decision. Where we often live, uh, oh, I don't wanna say exclusively, but a lot of time we're in that gray area where we're having conversations, and we're helping clients make decisions that may not be the optimal financial, you know, maximization decisions, right? 

How many times do we get asked, "Should I pay off my mortgage, or should I just continue to make my payment and, and keep my money invested?" And sometimes that is a financial conversation, right? I'm earning more than I'm paying in interest. That's a part of that conversation. But there are enough people in this area that we have talked to that say I don't necessarily... 

That, that's not a big enough factor for me. The fact that I have this debt is weighing on me, and I can't sleep certain nights, and that peace of mind to me is worth way more than whatever I can quantify, you know, the, what I could earn by investing versus what I'm gonna save in interest. It's kind of irrelevant for many people. 

It's that sometimes a s- a subop- suboptimal financial decision is still a great one for their situation, depending on their priorities.  

[00:12:21] Ben Haas: Very well said. And now I'm, I'm thinking, going completely off script here, and I hope this comes across okay. I feel like our clients are doing that all the time, and they don't even know they're doing it when it comes to these ideas- Yeah 

of investments, because we could tell you straight up, like, if you just leave it to us and you're a robot and you have no emotions, you should be 100%- Mm-hmm ... in equity because over time the market is always taking you to all-time highs.  

[00:12:42] Adam Werner: Right.  

[00:12:42] Ben Haas: We don't do that because people are willing to take the trade-off of I want a smoother ride, I don't want the emotions of it. 

I'm not maximizing my wealth so that I can maximize my sanity with my life, you know, for a lot of these people. So like that, that's a classic example of the other side where people are naturally doing something, I think, that is actually protecting themselves and their emotions. I realize when we talk about investing, that's really the opposite of PERMA, right? 

Trying to do these things that bring me happiness, where we're talking about investing, make sure I stay sane. Yeah. But it is a good example here, I think, where people are willing- Yeah. Yeah ... to make that trade-off.  

[00:13:18] Adam Werner: Yeah. And I think You know, for a lot of people that we talk to, it's It's hard to flip that switch, and I know we've talked about this in, in different podcasts too. 

The, the idea of, hey, I got to retirement, in this instance, because I was so disciplined, and I was such a diligent saver, and I was able to put the blinders on when the market was kinda going haywire. And now I got, now I got to retirement. I'm feeling fine. But it's hard for a lot of people. I had a conversation earlier this week with a client of ours, and it's... 

She's probably listening to this, but her spouse just has a really hard time being okay with now spending in retirement, even though they are in f- great position to do what they wanna do when they wanna do it. But it is. It's really hard for people that have just been so trained on, "I need to save. I need to be disciplined. 

I need to live within my means, and I-- it's gonna set me up for success in the future." And they have. But to flip that switch from, "Now I've done all of this hard work," to, "Now I wanna enjoy some of the fruits of my labor"- Yeah ... that's a completely different part of the brain that allows people to now Maybe carve off some of those dollars to now enjoy them. 

It, it kinda is counter to what got them there in the first place, and that is a really hard transition for a lot of people to make.  

[00:14:44] Ben Haas: And we're doing the best we can to learn how to help with s- with that because there, you know- Yeah ... depending on how people digest information, there are things that we can do to convince them that enough is enough, right? 

Yeah. Whether, whether that is calculations on what excess may exist under, you know, some really bad assumptions, whether that's- Yeah ... literally developing other accounts where we put money that we believe is excess so that they do feel comfortable spending it. Mm-hmm. For some people, it's just let me live off of the income if they've got enough saved, but let's quantify that and create the mechanisms for that. 

I think there are- Yeah ... things that advisors like us can do in that space, but I will toss this one back to you. I, I, I think even that, those things can only happen if we as advisors are willing to do a better job asking good questions and listening to truly how they answer them, where it comes to the things that they truly value in life. 

Because I j- again, I just think we're so trained to live in formula world where, "Tell me the amount of money you, you wanna have, tell me the age. We'll reverse engineer this math equation. Here, that's enough." But, like, that takes all the human emotion out of it, so just asking better questions about why those things e- exist, why are you truly postponing these? 

What, what, what if you didn't do these things and you got sick tomorrow? Like- Yeah ... not that we wanna approach these things from a very negative spot, but we have to be vulnerable enough to put our clients in that situation where they can be vulnerable with us and answer questions like that. 'Cause it's gonna help- Yeah 

us be able to articulate that to them, that then you need to go do this, take the trip, spend the money, have the experience.  

[00:16:19] Adam Werner: Yeah. And, and oftentimes, I think it's clients have that... Well, I, there's so many thoughts running through my head. You know, in the, in the absence in the absence of, you know, certainty or clarity, our brains will fill in some negative, it fill in some of that space with, with negative outcomes. 

Like, how can this go wrong, or what am I missing? What if I'm wrong? What if, what if I do need long-term care? Or what if Social Security is altered in some way? Or what if my pension, the company that's paying my pension, they go bankrupt, and now I don't have this income? So sometimes our job is to really illustrate, okay, if we can show some really big, like, what if negative scenarios, and they're still okay, we're, we're hopeful that that is some Encouragement and maybe adding some peace of mind that is, yes, we could illustrate all of these different outcomes or these, these different negative potential scenarios, and you're still okay. 

We would hope that that would give some level of, "Okay, well then maybe I can take this trip this year, or I can take the family and the grandkids to Disney and, and spend a chunk of money that maybe I wouldn't have otherwise, because I just... I'm worried about those what if scenarios," but I couldn't really quantify that. 

[00:17:40] Ben Haas: Yeah, and then, like, now we're talking out of both sides of our mouth, but it's on purpose, I promise. Because I know I've heard you say this, have that conversation and then flip it to the other side of the coin. Mm-hmm. What if everything goes right? Like, now you need to be willing, because you said you would, now you need to be willing to take these trips. 

And putting you on the spot here, how many financial plans did we write in 20... let's say 2020 or 2021, where we were projecting these massive returns from the market that we've had these last couple of years? Zero. None of them. Mm-hmm. So people probably are, I would hope they are further ahead from an asset value than we would have been projecting. 

So I think- Yeah ... that's why we need our- to give ourselves, as advisors, the permission to go back to clients and say, "Hey, this is-- we didn't plan on this. This is like-" Yeah "... maybe a little bit of house money. What are we gonna do with it? What have you been, been postponing?" All in that theme of we want people to live a full life. 

We want them to feel fulfilled, and that's maybe me trying to wrap up by saying, that's what maximizing life is supposed to be. Don't let this money just accumulate, accumulate, accumulate. At some point, you gotta... You probably know how it's gonna best serve you. Mm-hmm. But our job as advisors then is not to say you can't do this. 

Yeah. It's to say, "Go do it."  

[00:18:58] Adam Werner: Yeah. And, and maybe it's, this is me putting on the, the how guy scenario, right? That's, that's, that's where I live oftentimes. Sometimes it is just setting up the logistics for how they can go about that. Again, 'cause s- some of this is just so conceptual, but Ben, how, how do I actually-  

[00:19:17] Ben Haas: Yeah 

[00:19:17] Adam Werner: do this? And yeah, that's another role that we can play. It's not only just being a thought partner on the front end of the process, but hopefully getting to the end of that and actually putting in some sort of infrastructure that will support that and encourage that, and hopefully get some, some positive behavior for clients to check off some of those things that they know will be positive in their lives. 

[00:19:39] Ben Haas: Sounds like the next podcast.  

[00:19:41] Adam Werner: Great.  

[00:19:42] Ben Haas: All right, sir. Hope you have a wonderful weekend. Go maximize your life. Hey, you too. Spend the money. Take the trip. See ya. 

[00:19:57] Ben Haas: Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we voiced in the show are for general information only, and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you, consult with your attorney, your accountant, and financial advisor, or tax advisor prior to making any decisions or investing. Thanks for listening.