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Avoid These 5 Dangerous Attitudes When Piloting Your Finances Thumbnail

Avoid These 5 Dangerous Attitudes When Piloting Your Finances

I was recently able to spend some time with one of my flight instructors and mentors, General Hank Canterbury (above with me and my son, Devin). A retired Major General of the United States Air Force, Hank was a fighter pilot flying over 450 combat missions, a member of the Air Force Thunderbirds, and a graduate of the very first Air Force Academy graduating class in Colorado Springs. During his retirement from the military, General Canterbury has been training pilots and still does to this day. Needless to say, I am honored to have him as a mentor and instructor and look at the knowledge, wisdom and experience he shares with me as priceless.

I have made it a point in my aviation journey to study the things that can make for a bad day in the air. As in financial planning, there are attitudes, behaviors and actions that can set us up for success or set us up for failure.  I have made it an obsession of mine to understand those things – in aviation and in financial planning – as I consider both of these endeavors life and death. Below I have shared some of the attitudes that can get pilots in trouble. These are things that we train on and get conscious of in the very beginning of our ground school flight training in the section called “Aeronautical Decision Making”, or ADM. These “attitudes” come right out of our training materials. This is a nice follow-on to our last blog regarding the “IM SAFE” checklist. There are some solid comparisons to the financial planning world.

1. Anti-authority

The FAA has very strict regulations for air travel, so a would-be pilot isn’t going to get his wings without following the necessary rules and procedures. But the pilot who thinks he can deviate from those procedures or the instructions of a superior because he’s skilled enough or experienced enough can be a danger to himself, his crew, his passengers, and bystanders.

An anti-authoritative streak can also create dangerous attitudes about wealth management. At the extreme end are the Bernie Madoffs and predatory lenders who think they can do whatever they want with your money with no consequences. A more commonplace example is the investor who ignores the “rules” of good investing or the advice of a professional. These folks often think they can micromanage their investments minute-by-minute on their phones, timing the market based on whatever’s happening at that moment at the potential expense of time-tested, big-picture planning.

We have so much information at our fingertips these days that it’s possible for an investor to be too smart for his or her own good. Your financial future is just too important for armchair quarterbacking. Let the pros do their work.

2. Impulsivity 

I’d be lying if I told you that flying wasn’t exciting. But good pilots learn how to balance that excitement with the rational decision-making that’s necessary for a safe flight. A good pilot is consistently monitoring all the available information and correcting course as necessary. Knee-jerk reactions lead to a heck of a lot more emergency situations than they help avoid.

Often our emotions trigger impulsive decisions and dangerous attitudes. A pilot who isn’t prepared for a blotch of red weather on the radar might maneuver based on fear. An investor who sees his year-to-date ROI slipping might get scared and pull money out of that nest egg. The sympathetic parents who want to help a struggling adult child might cut a big check that throws off their retirement goals. In each scenario, working deliberately through a checklist to make a level-headed decision is the best course of action.

3. Invulnerability

“Nothing bad will happen to me,” thinks the pilot who takes off when he’s too sick to be flying, or ignores the weather report rather than delaying a trip. This is one of the most dangerous attitudes you can have about risks: pretending that you don’t have any.

Your finances aren’t invulnerable either. Having too much in any one security and believing that an “Enron” situation or the likes cannot happen to you is a great example of this.  Also, we often dismiss warnings about scams, hacks, and cyber attacks as things that would never happen to us or assume that some measure of fault lies with the victim. But fraudsters continue to come up with more and more devious ways to trick folks into compromising their identities, their finances, and in some sad cases, their nest eggs.

Take a moment to review these pro cybersecurity tips from retired FBI Special Agent Jeff Lanza. You might also consider sharing this article and podcast with any older friends or relatives, or others, who might be more at risk online.

4. Macho

General Canterbury and I can both tell some stories about pilots who don’t seem to realize that Top Gun is just a movie. Taking unnecessary risks and putting on a big show isn’t what’s going to earn the respect of seasoned aviators. Good pilots appreciate a clear head, an acknowledgment of limitations, and a broad perspective when it comes to making tough calls.

It’s never been easier, or more tempting, to get caught up in making a “show” of your financial situation. Social media and free two-day shipping have turned “Keeping Up with the Joneses” into something of a national pastime. But if you’re preoccupied with what your neighbors have and how you can get something better, you’re cultivating some potentially dangerous attitudes about your money. Study after study has shown that buying more stuff only creates brief hits of happiness. And if your shopping cart gets too full, you might rack up high levels of debt that affect your savings and investment rates. Is the stress of worrying about having enough money to retire worth breaking the bank for a new car you don’t need?

5. Resignation

The big commercial airlines all prize a certain kind of pilot: men and women who communicate well, make good decisions, and are resilient in the face of crisis. When a flock of geese jammed the engines of Chesley “Sully” Sullenberger’s Airbus, resignation wasn’t an option. Sully and his co-pilot didn’t see themselves as powerless. They simply did what they had to do to ensure the safety of their passengers and crew.

I understand why so many folks feel powerless when it comes to their finances. We can’t control how the market is going to react to a natural disaster or political crisis. Many young investors who grew up in the shadow of the 2008 financial collapse believe the market is rigged.

But the truth is that if you’re working with a fiduciary advisor and staying the course of your financial plan, then you’re not at the mercy of the market’s whims. Understanding your own attitudes about investing and addressing them head-on can be a powerful tool when it comes to making a better life for yourself and your family. Believing in your plan, and a checklist-driven process like we use at Keen Wealth, is just about the healthiest attitude an investor can have.

About Bill

Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.

KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.

The views outlined in the book, Keen on Retirement Engineering the Second Half of Your Life, are those of the author and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.

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