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Carl Richards: 'Let's Focus on Being a Little Less Wrong Tomorrow'

'The Sketch Guy' discusses the value of asking the right questions, how placing small bets is less daunting than setting goals, and finding 'enough.'

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Our guest on the podcast is Carl Richards, who specializes in conveying sophisticated financial concepts in an easy-to-understand way--specifically, using a Sharpie. Carl is a Certified Financial Planner™ and creator of the Sketch Guy column in The New York Times. He's also author of two books, The One-Page Financial Plan: A Simple Way to Be Smart About Your Money and The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money. In addition, he hosts the "Behavior Gap Radio" podcast and also co-hosts a podcast with financial-planning guru Michael Kitces called "Kitces and Carl."

Background Carl Richards bio

Carl Richards "Sketch Guy" column in The New York Times

Behavior Gap Radio podcast

"12 Simple Sketches That Perfectly Illustrate the Path to Wealth and Financial Happiness," by Libby Kane and Libertina Brandt, Business Insider, July 22, 2019.

The Behavior Gap "The Behavior Gap," by Carl Richards. Oct. 18, 2018.

"To Avoid the Biggest Investing Mistake, Stay Strong," by Carl Richards, The New York Times, March 26, 2013.

"Yes, Numbers Matter in Financial Decisions, but So Do Emotions," by Carl Richards, The New York Times, May 8, 2017.

Articulating and Achieving Goals "Goals As Guesses," by Carl Richards, YouTube, Jan. 16, 2018.

"The Magic of a Single Micro-Action," by Carl Richards, The New York Times, Nov. 6, 2017.

"A Simple Formula for Making Dreams Come True," by Carl Richards,, June 28, 2018.

"Hal Gregersen Interview: Asking the Right Questions,", April 8, 2018.

Questions Are the Answer: A Breakthrough Approach to Your Most Vexing Problems at Work and in Life, by Hal Gregersen, Harper Business, 2018.

The Dan Sullivan Question, by Dan Sullivan, The Strategic Coach, 2009.

"Your Future Should Be Bigger Than Your Past. Here's How to Do It," by Carl Richards, The New York Times, Sept. 14, 2018.

"The First (and Last) Step to Financial Satisfaction? Defining 'Enough'," by Carl Richards, The New York Times, May 1, 2017.

"Setting Aside Shame and Blame in Financial Decisions," by Carl Richards, The New York Times, Sept. 8, 2015.

"How to Talk About Money," by Carl Richards, The New York Times, Dec. 18, 2018.

"Look Inward to Determine Your Financial Values," by Carl Richards, The New York Times, April 20, 2015.

"Where Does the Time Go? You Can Find Out, If You Dare," by Carl Richards, The New York Times, July 5, 2017.

"Seeking More Fun? Examine the Returns on Your Time Investments," by Carl Richards, The New York Times, July 10, 2017.

When Things Fall Apart: Heart Advice for Difficult Times, by Pema Chodron, Shambhala, 2016.

"We Are All Normal," Meir Statman, Morningstar The Long View podcast, Oct. 30, 2019.

Finance for Normal People, by Meir Statman, Oxford University Press, 2019.

Thinking Fast and Slow, by Daniel Kahneman, FSG Adult, 2013.

"The Benefits of Getting an Icy Start to the Day," by Carl Richards, The New York Times, March 14, 2016.

Jeff Ptak: Hi, and welcome to The Long View. I'm Jeff Ptak, global director of manager research for Morningstar Research Services.

Christine Benz: And I'm Christine Benz, director of personal finance for Morningstar, Inc.

Ptak: Our guest on the podcast today is Carl Richards, who specializes in conveying sophisticated financial concepts in an easy-to-understand way, specifically using a Sharpie. Carl is a certified financial planner and creator of the Sketch Guy column in The New York Times. He's also author of two books, The One-Page Financial Plan: A Simple Way to Be Smart About Your Money and The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money. In addition, he hosts "The Behavior Gap" radio podcast and also cohosts a podcast with financial-planning guru Michael Kitces called Kitces & Carl.

Carl, welcome to The Long View.

Carl Richards: Jeff, super good to be here. Thank you.

Ptak: The Behavior Gap was the title of one of your books, and it's a recurring theme that runs throughout your work. So, for listeners that maybe aren't familiar with that term, what gap are you referring to, the gap between what and what?

Richards: Yeah, that's a super good question. It was originally the gap between the return of the average investment and the return of the average investor. And it's almost hard... The reason I draw these things out is because it's almost hard to describe, but it was originally the gap between the average investment and the average investor. And that gap happens, and it's important to understand just for the context of the next part of the answer, that gap happens really because there's a whole set of well-intentioned behaviors that we engage in because we think it's what you do when you're an investor. And a lot of those well-intentioned behaviors lead to suboptimal results. And that's what happened with the behavior gap as well is it expanded, at least my interest in it, expanded from just investment behavior and investor behavior now to any gap where we have a set of well-intentioned behaviors, things we're doing that we--because we think it's our job, we think it will help, and it actually produces not only neutral results, but maybe even negative results. So, in a nutshell, that's what the behavior gap has come to be.

Benz: Do you think the financial-services community has gotten too hung up on the investment behavior gap and not focused enough on these other behavior gaps that you've identified?

Richards: Oh, Christine, you've been thinking about this for a long time, too. I think if we talk about the traditional financial-services industry, it still feels a lot like, you know, what's the job of somebody in the traditional financial-services industry? Well, it's to find the best investment, right? And so, we still seem to be very investment-centric, which is why ... the majority of the people on the planet still describe their relationship with money using words like anxious or scared or nervous or uncomfortable, because we still haven't gotten it in our heads that this isn't about investing. This isn't about spreadsheets and numbers. It's about much more than that. And the more we hyper-focus on investments, the more I think we do people a disservice. So, the answer is yes. I think as an industry, speaking really broadly, we focus far too much on that.

Ptak: And so, if we were to shift as you suggest, what are the things that you think are devoting greater focus to?

Richards: Well, you both, obviously, you know this, if we spend--OK, so you have a pool of money, right? I would assume this sort of listeners, really, you've got a smart group of listeners that are focused on making good decisions around their investments, and what do we typically do as humans, when we've got a pool of money, we've got to figure out how to invest. Or maybe it's already invested. We're just trying to figure out if we're doing the right thing. We follow a very, very similar pattern. And that is, we say, OK, well, what's done well in the past? Now this is despite warnings all over the place. Say, past performance--no indication of future results, right? We all do it. I know I do. And I've been thinking about this for 25 years, I still do the same thing. And the reason we follow that similar pattern, like what's done well in the past, and we're really smart. So, we elongate the definition of past. The reason we follow that pattern is because it works in every other area of our lives. If you're going to hire a contractor for the house, it would be reasonable to go look at the past jobs they've done. And it would be reasonable to assume that the work they do in your house is going to be as good as if not better, or if you're going to hire a new football coach, etc.

So, when we're focused on choosing finding great investments, and even when we're focused on designing the perfect portfolio, like let's take a step, a level up in terms of sophistication, we start thinking instead of just individual investments, now we're thinking: How do we combine them on purpose to design a portfolio? We've got to realize that if we can design the best portfolio ever created, and one behavioral mistake, a decade really, and we might as well have sort of proverbial hidden it under the mattress. So, I think the bigger things we need to be clear about. It's not that that stuff is not important--like understanding the investment, understanding how to build a portfolio, critical. But I think there needs to be a layer beneath it that we just skip all the time, which is just some questions about why are we doing it. There's going to be some connection because, even the best portfolio, you're going to get punched in the nose. And when you get punched in the nose, how are you going to react is really a huge determining factor to your lifetime success as an investor. And if you're not connected to--if you can't answer the question: Why are you invested the way you are with something that has personal connection rather than like I read about it in the magazine?--your chances of behaving when things get tough are really, really low.

Benz: Let's talk about some of the behavioral gaps apart from the investment return gap that you think are really important that people should be talking about more.

Richards: Do you think it'd be helpful to talk about mistakes that we make? Or are you talking just mainly these sorts of like well-intentioned behaviors that produce suboptimal results?

Benz: Either one. However you want to frame it up is fine. And I do have a question about mistakes. But I'll save that.

Richards: I think the biggest sort of disconnect, and we've already hinted at it, but I think it would be worth repeating, the biggest disconnect--specifically when we're talking like before we get to the financial plan level, which I think is really important to get to--the biggest disconnect I see around portfolio design and investment selection is a lack of connection. In fact, let me tell you. The question is, How do I narrow it down to one story. Let me tell one of my favorite stories about this, and I can use somebody--we will just call this guy "Jeff."

Jeff is a retired--and this is a true story--Jeff is a retired investment banker. He had somewhere in the neighborhood of $20 million. We lived in the same community, different sides of the tracks, just to be clear, but we lived in the same general community. And it was a New Year's Eve. It was a New Year's Eve dinner. He said, "I've got to talk to you, like, I've got to talk to you" when he found out what I did for a living. "I've got to talk to you." So, we find a quiet corner and he said, "Look, I've got to tell you about your industry." So, this is an investment banker with enough money that he could get--he had retired, he had a pool of money, he needed help getting advice. He said, "I've met with all the normal suspects in your industry," and he named the firms. So, he had met with really high-quality people in our industry. And he said, The problem I have is no one has connected my use of this capital to my goals."

Now, you two can imagine what happened to my job, right? But he went on to explain to me: "There was lots of conversation about smart tactical asset allocation, about economics, about strategy from the strategy team, about deep analysis on individual securities or even the fund level, right? There was a lot of that. But what didn't happen was linking my use of capital with what I say is important to me." And I think that's the biggest gap I see--and I've made a habit of this. I have some strange kind of habits of questions that I love to ask people. And one of the questions I started asking about 10 years ago, just about anytime I could on planes, trains, wherever I was when the subject would come up, "What do you do?" and I would mention that I write and wrote books about finance and all the stuff. You know, I would say, "Look, why is your money invested the way it is?" And get answers like, "Well, I read about it in The Economist, like that's the really smart people, right? Or at least people who think they're really smart." "My friend told me; my neighbor told me." But the only correct answer is: "My portfolio was designed to give me the highest likelihood of meeting my goals," something along those lines. Because when that connection is not there--I think this gap is we think investing is an end. And that makes it really hard to behave. I've seen this on the institutional level--large university endowment that I got asked to come do a performance audit on. And I asked that question, "Why is this money invested this way?" Well, you know, the consultants came in and we had stacks and two-inch-thick proposals. But no one said, "Well, it matches the spending policy of the endowment."

So, I think that gap, that disconnect between why is the money there, why is it invested in the first place--and getting clear about that--because if you're not, you're investing based on other people's goals, what you read in the news. We went through that whole phase of Yale's endowment, like, everybody wanted to invest like Yale. Well, you're not Yale. So, I think that's one of the most important things we can keep hammering home is, yes, security, like being an educated investor matters a ton. Yes, having your access to really good information matters a ton. And then, you've got to overlay that on top of your own personal situation, which is why it's so frustrating to people because nobody can tell you exactly what to do. You've got to be actively engaged in that process. You got to be at least the copilot.

Ptak: I wanted to ask you about one of your famous sketches. And for our listeners who aren't familiar with your work, I think that they can readily find it online, but they sort of look like napkin sketches, and I hope you don't take exception to that, but they're very effective in their simplicity. That's basically a Venn diagram. And the one I wanted to ask you about: There are two overlapping circles. One is marked "Your use of capital" and the other "What's important to you." And the overlapping area's marked "Real financial planning." And so, my question is, How can advisors hone their skills in providing the type of advice you suggest that's in the overlapping portion of that circle? Are there any resources you'd recommend?

Richards: Sure, yeah. Jeff, I got to tell you a funny--I love hearing people describe what they are, because we like "cartoons," but that implies way too much skill, "sketches" or "napkins"--it's all fine. But one funny story is, I used to get these long emails from the Venn diagram police telling me why these things weren't Venn diagrams. And I used to engage: I'd write back these long defensive things. And then finally, I just decided, "Yeah, you're right. It's actually a circle sketch." ...

But I think there's a couple things that go into this, and this is useful both for advisors and for the people listening that aren't involved in this industry: Remember, there's two circles there, right? There's two things we have to figure out--your use of capital. Another simple way to say this would be: your values in your money or your money in your life, right? So, use of capital. And then, the other one was: What's important to me? Getting clear about what's important to you is really hard. I mean, I used to think that was like, "Oh, that would be the simple part." It's really hard. And so, it turns out that we've got all this stuff going on with mimetic desire. And I think it's only been made hard through, like, the Instagram life problem that we all have. Getting clear about your goals is hard. And I think that it's not a destination. It's a process. It's a journey. And the only way to figure that out, and I think advisors can get good at this, but we all individually need to get good at this, too, is, you sort of just make a guess, right?

One of my friends refers to it as "placing bets." Like, I think this thing over here will kind of make me happy. We can relax a little bit. I find as soon as I use the word "goals," people are like, "Ah, like, there's so much pressure." I love to just call them "guesses," like, "Relax, just guess: Where do you think you want to go?" We place a little bet that way. We take a step. And when we take this new step, we start aligning our use of capital to help us get that direction. Let's say we think that it's important that we educate or we provide Ivy League education for our kids. I don't know – I'm making something up. We think it's important that we take that trip five years from now. We think it's important that we retire. Whenever it is, we make a guess, we start moving that direction. And then, we need to realize, and I think this is a big part of the problem, guesses and planning. It all sounds so serious, and it all sounds written, like carved in stone. And if we start to lighten up a little bit and realize these are guesses. Let's not worry about being right today. Let's not focus on being right today. Let's focus on being a little less wrong tomorrow. And so, that first circle, "What's important to you"--you don't know? Every time I've asked somebody that question, they've had some idea. And so, we write that down. And then we review it. So, that's the first area.

And then, aligning your use of capital. Obviously, that becomes just much more about tactical financial planning and investment portfolio design. If we know where we want to go, it's much easier to decide. Do we want to take a train, a plane, or an automobile to get there? But I'm finding most of the time people are arguing about train, plane, or automobile, and they've never had the discussion about where you're going. So, the shorter version of that answer would just be: Place a couple of bets, make a guess, head that direction. I like thinking: Make a guess, take a step forward. When you take that new step forward, what will become available to you is new information, just literally by the fact that you're in a new location. When you get that new information, incorporate it in the complexity literature, they say, solve for the next local optimum, and then reset. That's all it is. It's a game. And we should just relax a little bit. And I don't mean game like it's not serious. It's super serious. But that's the complexity on the other side of that simple image.

Benz: It seems that some advisors might find themselves with a bit of a mismatch. So, their training and even their own innate tendencies might make them more comfy in the realm of numbers. But you're suggesting that they need to get better at psychology and emotions and helping clients figure out what they value, what constitutes life for them. So, how can they hone their skills in the latter area in really helping clients get to the bottom of what matters to them?

Richards: Christine, this is why I've been so excited to do this show for the couple months we've been talking about is you guys have such good questions. That's such a great question. And I'm really, really glad you asked because I think it's an important place to just explore. And this is really critical to understand. Again, both advisors and public listening to this, it's really important understand, I am not in any way downplaying the importance of the spreadsheet and calculator, right, especially advisors. Like, you've got to be a pro, don't get confused. I like to just think of it as technical rock star, right? Like, you've got to be really, really good at this. But that's no longer sufficient. It's necessary but not sufficient.

And so, I think, what do you do, how do you layer this additional level of skill? And another way I've been asked this question is, "What would you study if you were going back?" Because I got a finance degree. I still think finance but I would love to layer on a psychology degree with it or marriage counseling or coaching. But I think one area, one simple area, simple place to start would be just start reading what you can about asking really good questions. Find the good books about asking questions. Hal Gregersen--and I think I'm getting his last name, right. If I remember right, he's at MIT. And his entire focus is on questions, asking really good questions. Asking really good questions, active listening, it turns out that's a skill. It's a skill that you need to practice. And most of us, most of the people listening to this, I would imagine, it hasn't really been our focus. And it's not like, no shame, no blame. It's OK. But now, we've got this chance to start thinking about, "OK, how can I learn to ask better questions, how can I learn to actively listen, how can I understand"--speaking specifically to the advisors--"how can I understand that you're not in the solution business?" Like, no one cares about your solutions. It's almost impossible for a spreadsheet-and-calculator person to believe me when I say that. They care about their problems. So, you're not in the solution business. You're in the "problem understanding" business. Now, of course, after you understand the problem, you've got to provide a solution. It's a little bit like: You're not in the prescription business; you're in the diagnosis business. And that will point you in the right direction in terms of learning how to develop that skill.

Ptak: You had given an example earlier of a question that I think you said you found effective. It was revealing about how it is an investor arrived at the portfolio allocation that they arrived at. Can you give another example of a question that you found to be particularly effective in revealing the totality of a client's circumstances and what it is they're truly aiming to do to help guide you as a professional?

Richards: You guys are pros. So fun. So, here's one of my favorites. It's Dan Sullivan. Dan Sullivan runs a company called the Strategic Coach. He wrote a book called The Dan Sullivan Question. So, it's not that hard. Lacks a little creativity in terms of the title. But his question--and I love this question--is, you know, Jeff, if we were meeting three years from today, and he even suggests saying, if we were meeting April 29, 2023, what would have to happen in order for you to feel like the last three years have been a success, both personally and financially? Now, what's going on, what we're trying to do in our minds and what an advisor--and again, if this is speaking to a professional--but again, I think this is applicable no matter who you are, what your job is--what you're trying to do is you're trying to create a desired future state. And again, relax, it's just a guess.

I mean, I just think it's so funny how serious we get about these things. Like, if you had asked me three years ago where I was going to even like be living. I've lived--in the last five years I've spent four years in New Zealand. I was in Utah, spent four years in New Zealand. And now we've been in London for about four months. That's in the last five years. If you'd asked me five years and two months ago, where I was going to live, New Zealand hadn't even crossed my mind yet, let alone London. So, we don't know. So, we're trying to just guess at a desired future state so we can have a direction of where we're going. So, that's one of my favorite questions. Dan Sullivan's--if you and I were sitting down three years from now, what would have to happen? And I like three years. Dan has probably asked that question 100,000 times. I think there's meaning behind every word. What would have to happen in order for you to feel like the last three years have been a success financially?

Benz: You've become kind of an evangelist for mindfulness in terms of encouraging others to be more mindful and deliberate about how to spend their money and their time. A sketch of yours relates to that issue. It has a bar for getting ahead, which stretches out into infinity. And then it has this shorter bar that's enough. And that seems to me to be just a huge challenge, like figuring out what is enough. So, how would you suggest that people get their arms around that issue for themselves or advisors who are working with clients?

Richards: OK. So, just to do a little art on the radio, so imagine a bar chart with the bars going vertically up and down a piece of paper and there's one bar that goes from the bottom of the paper all the way off the chart, like you can't see it, it leaves the edge of the paper. And my editor loved that one because he's like, Wow, that's a – he's like "It leaves the paper and then the other one hasn't." It's a smaller chart and the one that goes off the chart is labeled, as Christine said, it's labeled "getting ahead," and the other one says--I don't know if it says "getting enough," or if it's just labeled "enough." It's so hard. It's so hard. And I think if we accept that it's a journey that we're just going to be exploring. This is part of what it means to be human. I think a lot of these things we feel like--we're adults, we should know. I just turned 48, I have no clue. I still find myself at the dinner table leaning back--and all my kids are, we only have one kid left at home, and she's still catching me doing the same thing I was doing 25 years ago, which is leaning back--putting my hands on my head and saying, "Gosh, I wonder what I'm going to do when I grow up."

And so, this idea of us identifying enough, I think if we just all give ourselves a little slack and realize, asking these questions what it means to be human, you're going to overshoot it, you're going to undershoot, you're going to come back to it. But I can tell you that that "getting ahead" line is accurate. If that's your focus, you will never be done. Like you'll be pursuing, pursuing, pursuing. And if we can figure out through just trial and error, placing bets, getting closer and closer to our own "enough"--and the dilemma is, of course, like yours is different than mine. And they're both OK. That's been really hard for me to accept is, "Wait, somebody's 'enough' could be 10 times my 'enough.' And that doesn't make them a greedy person. It just means they're a different person."

So, I think the way to think about that is just: Start paying attention. And again, it's fun. It's not like flossing, right? Like, we don't have to beat ourselves up. Every time we hear like "Budgeting. Oh, no!" No, no, no, no. Budgeting is just a tool for mindfulness. It's just a tool for awareness. So, you just start paying attention. Like, when I spend money on that thing: How do I feel? And then, my favorite question when I'm doing this is, like, 100%, you got to put on your no-shame, no-blame hats. We actually have a hat. It's a trucker hat. We wrote across it with a sharpie, "no shame, no blame," and actually put the hat on. And the question is--it's not even a question, it's just a statement. You spend money on something; you notice how it makes you feel; and you just say,"Isn't that interesting? I felt this way when I did that." Interesting, right? No shame, no blame. You're not even trying to fix it. You're not even trying to say, "I won't do it again." You're just saying, "Isn't that interesting?" And I think that's to me, like at the crux of budgeting, but I think that's one exercise you can play with to start to narrow in on what's your "enough," what's enough for you.

Ptak: Do you think the current pandemic, tragic and disruptive as it's been, can potentially help with that definition of "enough" and that most of us have the opportunity to slow down and take stock of what we used to spend money on that we miss or don't miss?

Richards: You're batting at 1,000 in terms of good questions. So, yes, I do. And again, I think we've got to generally, and I mean this humbly: Can I propose that we just set aside any sort of shame judgment what other people think, what anybody's worried about, like the happiness privilege police or anything else. No matter what our circumstances are, times like this force us to ask questions. I remember this in 2008-2009. I remember sitting in cafes or restaurants in 2008-2009 and hearing conversations that I hadn't ever heard before. And they were conversations about, "What's important to me and who do I trust?" And I'm hearing those conversations, and it really feels amplified right now, because just the nature of this has forced us to go without. If you had told me six months ago that my travel schedule would look like it does, I would have said, "That's impossible." It will not work--and yet it's working, right? So, I think this is an amazing opportunity to just ask some questions, as painful as many of them are, and say, "What do I value about that? And some of it's going to be: It was taken away from me; I found that I don't need it. There's going to be another list of questions: it was taken away from me, and I really, really value that, right? And I think paying attention to that's really important.

Benz: Figuring out what we should be spending time on is arguably a bigger issue, more important and impactful issue, than figuring out what to spend our money on. So, how can people get their heads around that issue? Is the thought process kind of the same in terms of aligning your finances with your ultimate goals for your life?

Richards: Yeah, so happy you asked. I think time and money, they're my two favorites. So, the work I'm doing now, if the listeners were to take out a piece of paper and you draw a Venn diagram that's got no overlap. So, in other words, just draw two circles with a gap between them, no overlap, and in one, write down "values" and then the other write "actions." And I think you could also write in the values where you could put any values you could write "use of time and money." Time and money are so cool because they're so revealing. I love the old saying, and I can't find the original attribution. So, I guess my editor friends would say we attribute it to anonymous. "The checkbook and the calendar never lie." And the academic literature we would refer to this as "revealed preferences." I do care what you would tell me but I care even more--like give me your checkbook and your calendar--and I don't even know if we use checkbooks anymore, but give me your checkbook and your calendar--and I'll tell you what's important to you.

You've got one circle with your values. You say things like "spending time with my family, mainly outside," or "I'd like to coach my daughter's lacrosse team." That's in your values thing. And then, over there, time and money, and there's a gap. Well, that gap, again, is painful. And for some reason, we come preloaded with all sorts of fancy software to avoid that gap, because it points at a place where we are not being authentic to when we know this, we feel it. Like, we may not know it consciously, but we feel it. We're not being authentic to our true selves, to the things we say are important to us. And all I'm saying is: Let's not run from that gap. It's too important. Let's dive in. So, you want a way to do it. Try this. Load RescueTime on your computer. RescueTime is a software that just monitors how you use your computer. Here's what I did. I did this with the RescueTime team. It was so insanely painful. And of course, I read about painful things publicly. So, my wife loves it. But I made a couple claims. This would be a test anybody could do.

Make a couple of claims on how you spend your time related to specifically maybe how you use your computer, make a couple claims. So, I made claims like I never check my email after 5 o'clock and I don't turn on the computer on Sundays, and I don't care at all about sports. And I am not interested one bit in politics, and certainly there's a specific news channel that I would never go to. Like, those are some of the claims I made. Then I installed RescueTime and I said, "OK, I don't even want to see it for 30 days." And I just forgot about it. And then 30 days later, I opened it up. And we compared my four claims to my reality. So, we looked at that gap. There was a massive gap. It was unbelievably painful. And here's the thing. It's cute. My friend, my dear friend, Mr. or Mrs. Listener, like it's cute that you think you're on top of that. I'm being a little sarcastic here, but I'm doing it in a way that I wish I could give you a hug right now and I know I can't for like three or four different reasons. But it's cute you think you're on top of that. But RescueTime has the data, millions and millions of people. It's like only 10% of the people go more than 17 minutes without checking their email on their computers. Come on.

And so, the way to fix that is either we can keep ignoring it and get nowhere or we can dive into it, painful as it might be, and say, "Cool, I'm going to try again tomorrow." And so, that's one tool you could use is some sort of time-tracking system and just compare it to how you thought you were using your time and I think you'll be blown away.

Ptak: You had a great sketch recently, where the thesis was basically that what constitutes security for someone isn't a number necessarily. In your sketch, it was represented by a rectangular box, basically a number surrounded by the rectangular box. And you argued that instead it's something kind of happier but less tangible, which you represented as kind of a squiggly flower. And so, my question is how can you…

Richards: A cloud, Jeff. Jeff, Jeff, a cloud.

Ptak: A cloud. I apologize. My question for you is, "How can individuals help define what gives them security, and how can advisors help their clients to figure out what constitutes security for them?

Richards: So, what I was trying to capture in that sketch is, yeah, you're right, there's a rectangle and the lines were supposed to be straight and the angles were all at 90 degrees around "number." This thing, we can measure it, it fits in a box, and then, you know, it said, "security is not a number." It's a feeling and the feeling was this, I guess, a flower, as you say, but I think it's supposed to be a cloud, meaning it's much harder to get your hands on, it's harder to measure. It's elusive. Look, this thought annoys me every time I have it. This idea that security--if you're financially, if you're insecure with your relationship with money, more money won't solve that problem. I wish I could just let that sit there for a minute because it annoys me every time I say that, but it's true. And here's why I know it's true.

I have friends, and I know people, I've had hundreds--at this point in my career I've had hundreds of conversations with people who have more money than they will ever need. They like almost couldn't, right? More money than they would ever need. And I'm not saying universally, because I know there are exceptions, obviously. But I can point to hundreds of examples of people who have more money than they ever need that are also: "Tomorrow is the day they're going to end up under a bridge." Some of the most financially insecure people I've ever met. And then, I've had these conversations too--people who live paycheck to paycheck, don't know, and are some of the most financially secure people--sorry, I should just be careful--are some of the most secure people. I mean, the reason I want to be careful with that is that I don't want to even hint that it's about money. And I know I just had this conversation today with somebody on Twitter. She said, "Look, I love your work, but I don't get this. I live paycheck to paycheck, and I am definitely less secure than my friends and have a bunch of money in the bank." And I can't deny that. But I can tell you that if there's no other work going on, having money in the bank doesn't automatically qualify you to be secure.

So, I think that's a different set of work. And here's what I think the answer is. It drives me nuts, but I was just listening to Pema Chödrön--Pema Chödrön's book "When Things Fall Apart," which I would strongly suggest, especially right now, and it's brutal in its honesty. So, I would suggest like the audio book is amazing. Listen to one chapter at a time. It's all you can do to yourself. There's one section, and I think it's Chapter 7, where she says in the audio, she says--and this will really I think will resonate with your audience because I would imagine they like spreadsheets like I do--she says, "We've tried a thousand times to tie up all the loose ends and yet the ground is still shifting beneath our feet." I mean, I don't know exactly what that means. But I know that I've tried a thousand times, I can show you the spreadsheets, to tie up all the loose ends and yet the ground is still shifting beneath my feet. And I think that points to this idea that security is a myth, like certainty is a myth. And after all we can do, we can do the best we can, and then learn to sort of surf reality, which is like surfing uncertainty.

So, anyway, that's where I would go with that is: It's a different set of work. It's a different set of work than money.

Benz: So, Meir Statman has argued that too much of behavioral finance is framed negatively. It focuses on cognitive errors and mental mistakes. And his view is that these behaviors are all new and they're all human. So, do you do you think a reframing would be helpful along those lines to not bring so much negativity into this conversation about how people handle their money?

Richards: Yeah, thank heavens for Meir. It's so, so good. And I agree, there's a sense of, I like to think of it as smugness, there's a sense of smugness, especially in the financial-services industry, as we learn about behavioral finance to sort of look at all the silly humans making all the silly human mistakes. We've somehow become elevated or transcendent, and we see this in public forums, I'm just going to point at Twitter specifically, where you've got people who are well-intentioned and think it's their job to point out how silly it would be for somebody to be scared. And I'm not sure, but I think what Meir is saying is exactly what I would say, which is, "No, that's called being human." And I think in the early pages I remember being a bit discouraged by this, but in the early pages of Kahneman's book, I think he even said something like--if he doesn't say it, then I've heard him say it elsewhere. But I'm pretty sure it's even in the introduction of "Thinking, Fast and Slow" is--and he's very open with the fact that even after studying this for whatever, how many ever decades that is, that he's still making those mistakes. And what he says was, "I'm not necessarily writing about this in hopes that it will cure it, that you will stop. Why I'm writing about this is next time you do something silly, you'll know what to call it."

And I think that model where we just go, it makes total sense, why you want to pull your hand off the burning stove. Are you kidding? You're wired that way. That's called being human. Let's understand it. Realize that we're human and let's in a healthy, happy, positive way, figure out how to put guard rails around our behavior. Because when that wiring works against you, you've got to acknowledge it exists and then say, "OK, what can I do to prevent it?" So, yes, I totally agree with that idea that we should be flipping that on its head and maybe even celebrating it a little bit. Look at the foibles of the human condition and realize those things have kept us alive as a species, right? It reminds me of when people say, like, "kick fear in the teeth." Fears kept me alive. I don't want to kick fear in the teeth. I just want to figure out, as Liz Gilbert says, "Fear can come on the trip; I just want to figure out how to make sure it stays in the backseat."

Ptak: You've written about the virtue of doing things that are hard, and I think that you've alluded to that earlier in our conversation. But I'm referring specifically to your ritual of cold-water bathing. And so, can you talk about the benefits of doing hard things?

Richards: Yeah, there's so much there. I think just in general, the benefits of doing hard things are we drastically underestimate what we're capable of. And I'm not even talking about hard heroic things. It doesn't have to be a marathon or an ultra-marathon. It doesn't have to be public. My hard thing right now--getting in cold water every morning, which I've been doing--is not hard anymore. It actually helps me feel so good that I can't not do it. What's hard for me is a 45-minute session of complete focused work without checking on some dopamine response on the interwebs, right? So, whatever it is for you, identifying something that is hard, that's just called growth, and I'm trying to structure my life right now to strip away all the hiding from growth and expose myself as often as I can to that situation where I go, "Wow, geez, I could do better there." And the reason is: Growth is what we're here for. And so, yeah, I think that's why hard things. Now, water. Specifically, one of the things I love about that idea was first thing in the morning, right? And you could use anything you want--like a half an hour of focused work first thing in the morning, writing your mom a letter first thing in the morning. The nice thing about that, not that writing your mom a letter could be hard, it's just like the discipline of doing something. The nice thing about that is I also love the benefit of if you do something hard first thing in the morning, it sets you up for a much more productive day is what I found.

Ptak: Well, Carl, this has been fantastic. Thank you so much for your time, insights, and perspective. They've been really, really interesting to listen to, and thanks for spending time with our listeners. We greatly appreciate it.

Richards: It may have sounded like I was joking. I just want to emphasize, Christine and Jeff, I do a lot of these and you can tell the difference between a pro and a non-pro. Thank you, the two of you, for the gift you gave the rest of us in the work you do. We know you don't have to do this. So, thank you. It's been an absolute pleasure and really, really enjoyed. So, thanks for the work that you do.

Benz: Thank you, Carl.

Ptak: Yeah, thanks again. We really appreciate it.

Richards: Cheers.

Ptak: Thanks for joining us on The Long View. If you liked what you heard, please subscribe to and rate The Long View from Morningstar on iTunes, Google Play, Spotify, or wherever you get your podcasts.

Benz: You can follow us on Twitter @Christine_Benz.

Ptak: And at @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis or opinions or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)

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