Ep # 26: Should I Or Shouldn't I? The Fear Of Missing Out
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Benjamin Haas 00:03
Hi everyone and welcome to A/B Conversations, where we will help you CFP your way out of it. A podcast where you get into the minds of a couple of Certified Financial Planners on how we feel about everyday financial planning questions and what should really matter most to you. A healthier financial life starts...now!
Adam Werner 00:26
Happy Friday Ben.
Benjamin Haas 00:30
Hey Adam, how are you today?
Adam Werner 00:33
Benjamin Haas 00:34
Adam Werner 00:34
Well again, for those listening, we're recording this on a Friday so work week is all but behind us. Now we just get to have a little bit of banter, share some education.
Benjamin Haas 00:46
Adam Werner 00:46
And move on. So today, I think an interesting topic and it's been coming up a lot recently, it's based off of a lot of headline news and it's the fear of missing out or FOMO.
Benjamin Haas 01:02
Adam Werner 01:04
When it comes to investments, we certainly feel that or we get asked the questions from a lot of clients on what do you think about this? What do you think about that? It was GameStop in the headlines, it's Bitcoin in the headlines, it's specific stocks, whatever it may be, is this something I should be doing?
Benjamin Haas 01:21
Yeah, we definitely see it a lot when it comes to investments but we see people bringing this up, maybe in a different context to like, I just don't want to work anymore because I see some of my friends aren't working anymore. I want to spend more time with my grandkids. Sometimes I feel like I'm missing out on something so I'm going to make a gut reaction, I'm going to make some sort of decision and of course, we love and care for our clients. We want to make sure the decisions they're making or the feelings that they're having are really good healthy ones, not only for themselves but certainly their financial future. So that's why the fear of missing out, FOMO, is something that concerns us and let's talk about it.
Adam Werner 02:04
I think you'll elaborate on this a little bit but it's incredibly natural, right? It's human nature to not want to feel like you're left behind in any sort of trend or craze or fad, whatever.
Benjamin Haas 02:23
So this is absolutely like herd mentality stuff, right? And you use some good recent examples, you're going to have these thoughts when you see people making a quick buck in this or some sort of kind of misplaced understanding of something that really worked out for somebody else, but maybe doesn't even really apply to you. It's just it is human nature. It's not that you're uneducated. It's not that somebody else knew something more than you and figured something out. And you're like, why did I know that? Why couldn't I have done that? I think to your point, it is that human nature of just wanting to get from A to B. That's what planning is supposed to be about goal planning. These are the things I want to accomplish and feeling like somebody got there really quickly or they skipped a couple steps and you don't want to have to go through this long grind to get there if there was some shortcut.
Adam Werner 03:15
Yeah. You you've said it in many meetings. The saving is hard, we acknowledge that.
Benjamin Haas 03:26
Climbing though salary ladder at work. That's a hard thing, it takes some people years to get to the position that they really want.
Adam Werner 03:34
And our world has certainly shifted to more instant gratification, right. I feel like that's way more prevalent. It's just the way of the world now. When it comes to news, information, whatever it is at our fingertips. If we want something at least I know this is true in my house. If you want something, you go get it.
Benjamin Haas 03:56
You don't have to go shopping anymore. You click the Amazon button on the app on your phone and a day later it shows up.
Adam Werner 04:03
I think that has kind of shifted just the overall approach to things in life and when it comes to your point, climbing the salary ladder, just saving towards your goals over time. It's not fun so if there's a way you're seeing other people maybe accelerate their goals or meeting their goals by taking on a certain risk, maybe and it worked out for them. It's the fear of missing out, right? Why don't I do that, and I could check some of these boxes on things I wanted to do and keep moving.
Benjamin Haas 04:40
So then let's address how we want to help somebody with this and this isn't getting the specifics of finances. This is more like the behavioral finance side of things. Step one, just recognize it. Again, if it's human nature, it's instant gratification, it's the world of news. We're seeing a lot more, it's Twitter, very quickly, you can see what somebody else was doing and how they did it. Step one is just recognize it but then I would say step two is, put it into context and I think, well, I'll put this over to you. How do you help people kind of put in context? What FOMO can mean as some sort of trade off?
Adam Werner 05:22
Yeah, so it has come up in a few conversations recently with clients and I asked the question, whatever the stock or the decision is, it's an either or. Which would you regret more? Is it not investing and seeing others around you profit from it? Or is it investing and seeing it go down, over time? Which feels worse to you and if it's why I don't want to see others around me. Take advantage of an opportunity that I had but I chose not to. If that feels worse, then let's talk about, you know, ways to keep the main thing the main thing. Let's make sure you're still on track for your goals and if it's carving out a portion to just scratch that itch, then that's okay. I'll use the lottery example. We talked about this. If you're in an office or you're in a workplace and Powerball reaches half a billion dollars, 500 million, and somebody's going around collecting funds from everybody. Do you want to be the one to not contribute to that and everybody happens to hit and now you're the only one in the office left? Because everyone else, has millions of dollars? That again, that's human nature.
Benjamin Haas 06:42
Yeah and that's where I think putting it into context. That's such a great example because that's a $5 expense. That is not some sort of, I'm changing the potential trajectory of my financial plan. And I know we would all say, hey, if I'm participating in 500 million, like, great, that's changing the trajectory in a really good way but it does have to come to some sort of trade off and if putting a lot of money or taking some sort of unwarranted risk could actually set you back years, decades. Who knows? Depending on what your financial situation is, then most people actually wouldn't take that risk. There is more of human nature for loss aversion than there is for wanting to see more aggressive return. Put it into context. That has to be the second thing. Don't misplace it. I would say the third thing then is, let's have a plan for how to deal with that and I think between recognizing it and keeping it into context, it's okay to talk about it. Especially if this is going to be some sort of financial investment. Keep something. Right, anything. Maybe that's a friend, maybe that's coworker, maybe it's a trusted advisor, but keep something between you and your impulses to make some sort of dramatic, drastic decision.
Adam Werner 08:12
I think that's very fair so I'll elaborate. We, as we've already shared, but we've had those conversations with clients, they seem to keep popping up as, you know, headline news seems to just churn out the next biggest thing and it gathers eyeballs, but we are okay to have that conversation and at least again, just give that perspective in that context. In the grand scheme of things, is this truly a path you want to go down? Or is it just the curiosity of, I don't even know what a Bitcoin is, should I be invested in it? Just wanting to learn in general, is a part of that and we can play that role to at least again, provide that context, a little bit of education. We don't need to make that decision for you. We'll educate you, give as much information as we have and let's figure out if, you know, whatever that is, does play a role.
Benjamin Haas 09:15
Yeah and I think this is probably where we could transition the thought of FOMO combined with the Do-It-Yourself mentality does feel a little bit more dangerous. And I'd say that's where overcoming the water cooler talk. I mean, nobody's working in an office building right now where everybody huddled around the water cooler but you get where I'm going with this. It's the well, my friend this, my cousin this, my other professional says this, we will always talk to the dangers of not understanding how different circumstances and what different parts of different financial lives can really lead you astray to thinking, well, if it works for them, it must work for me. Right? I think there has to be, we're happy to have those conversations, to put into context, here's why that may not work for you or here's what you told us was the most important thing. Most people, we all want to generate more wealth. We all want to move that net worth number forward but it is really just to get us to some sort of desired end state where that wealth is the vessel to bring us a more meaningful life more purpose, aligned with our values. So the path to get there can be very different for different people and I think again, you can get really tied up and really backwards, this fear of missing out with either a do-it-yourself model, or I heard this work for somebody else, doesn't really align with what makes up your financial life. And even worse, doesn't even align to what you actually value.
Adam Werner 10:46
I'll use your example that you used earlier, it's climbing a mountain, right? If your goal is to climb that mountain, a lot of the satisfaction is in the actual hard work and all of the trials and tribulations to get to the top. If you could just press the elevator butto and it takes you to the top of the mountain. Is that as satisfying?
Benjamin Haas 11:09
Adam Werner 11:10
I don't know, I've never done it.
Benjamin Haas 11:12
It's not at all and I think that's actually a really good way of putting it, you know, there. We all want to get from A to B and we want to do it efficiently and that's what financial planning supposed to be about but it's not a straight line. I don't think there are a lot of shortcuts and if you do try to take a lot of shortcuts, we have to recognize that those don't always work out and part of the process. And part of having a plan is to recognize that it's supposed to kind of try to keep you away from dark alleys and it's not that it's always going to occur but certainly, the more shortcuts you try to take, the more you're going to miss the mark, I think. Recognize it, put it into context, have a plan with how to deal with it and sometimes let's just have somebody that you can talk to, to kind of keep things in context for you.
Adam Werner 12:00
Yeah, talk it out.
Benjamin Haas 12:03
All right. Hopefully, this helps people with the concept of FOMO.
Adam Werner 12:10
Benjamin Haas 12:11
All right. Thanks for the chat again this week.
Adam Werner 12:14
You got it.
Benjamin Haas 12:26
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 or financial advisor or tax advisor prior to making any decisions or investing. Thanks for listening!
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