It’s hard writing about the lessons we’ve learned during the Covid-19 pandemic when the disease is still around. It’s like writing about the legacy of a president in the middle of their term. Will any lessons be durable?

In his book The Premonition, A Pandemic Story, author Michael Lewis describes one of the key players dealing with the original crisis, Carter Mecher, a senior advisor for the Office of Public Health in the Department of Veterans Affairs. He tells the story of troops lost in the Alps who found their way out with a map, only to discover later that the map was of the Pyrenees. The takeaway: At least the map was a starting point.

Most of us were lost during March 2020. Clients felt particularly unsettled. Their work lives had changed, as had their account sizes, their picture of retirement, their confidence in their health. Nobody knew what was going to happen next. Clients also needed a starting point—any sense of a path out. They didn’t know if they were getting a map of the Alps or the Pyrenees. But somebody had to get them started.

We financial advisors likely went back to our Monte Carlo assumptions about spending policies and showed clients how we planned for ranges of outcomes far worse than this. Other times, we had to help them explore changes they were thinking about without pushing them into irrevocable decisions. We had to communicate to everyone that we had a plan to deal with uncertainty, that we were going to adapt to changing conditions as we saw fit. We never told people to “stay the course.” That term should be eradicated from our vocabularies. It implies we simply set and forget things. Instead, we encouraged clients to rebalance their investments, to make sure they had cash set aside for spending, and to talk about their discomfort rather than try to dispel it. We get paid for the hard conversations, not the easy ones. If you think about planning, we are never done. Because life changes. In essence, we have to keep getting started.

The pandemic also demonstrated how clients always react emotionally first—and intellectually justify those first emotional reactions later. Later may be only a millisecond. Our prefrontal cortex is the youngest part of our brain, and therefore the most immature, yet it often rules us in ways we may not see.

For instance, in all my years of planning, I have never seen political battle lines so clearly drawn. Each side believes their reasoning for the positions they are taking and neither side has much room for the other. There is no amount of evidence to convince someone their core beliefs are wrong. It wasn’t just Fox News or MSNBC getting them riled up; it was everything and everyone with a world view different from their own. When we should have talked about the trade-offs we needed to be making, we talked in terms of good and evil. 

This happens in planning as well. One of our clients wants to leave 100% of their portfolio to their kids. Their portfolio has essentially doubled in the last few years, so the 100% is twice the amount they originally planned on leaving. But maintaining one hundred percent of their portfolio means that they won’t be able to spend as much as they would like to on themselves. This is an emotional decision. It may be about creating safety for their children, feeling undeserving of their own wealth, discomfort with their level of spending, or any number of things I have not yet unlocked while I’m trying to create a good outcome. Charts are not the key. Conversation is. I have to find a way to connect with the client at this visceral, emotional level.

Our clients also began to understand both the limits and value of science during the pandemic. It was clear that masking, social distancing and vaccinations would slow the spread down, but science requires a constant stream of experiments to predict outcomes. It doesn’t promise the certainty of those outcomes. New evidence that contradicted a posited theory was held up as proof that the scientists didn’t know what they were talking about. That wasn’t what this was really about.

As hard science focused on managing the pandemic, soft science (economics) was attempting to manage the economy. How many lives were we willing to sacrifice in order to keep the economy running? What was the societal cost of depression from losing your job or your business? If we could have shut things down completely, would our economic recovery have been quicker? In financial planning, we are sometimes expected to act as mathematicians rather than scientists. Instead of acknowledging the limits of what we know, we try to prove we know what we don’t. We tout things like: “Markets are expensive because cap rates are too high.” “Value stocks don’t consider monopoly pricing power or the real benefits of intellectual property.” Scientists observe and should be equally interested in proving or disproving their own hypotheses. But our clients want certainty, so we often try to give them something that doesn’t exist.

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