Fix It Friday Ep. 29 - Behavioral Investment Counseling: Interesting to Learn… Life‑Changing to Live

• Great investing starts with a financial plan—not investment selection.

• Market volatility is temporary, but inflation permanently erodes purchasing power.

• Behavioral coaching helps investors stay disciplined when emotions are strongest.

• Long-term wealth is built through preparation and consistency, not market predictions.

Disclaimer: [00:00:00] The following podcast by Fusion Family Wealth LLC, Fusion, is intended for general information purposes only. No [00:00:05] portion of the podcast serves as the receipt of, or as a substitute for, personalized investment advice from Fusion or any other investment professional of your choosing. [00:00:10] Please see additional important disclosure at the end of this podcast.

A copy of Fusion's current written disclosure brochure discussing our advisory [00:00:15] services and fees is available upon request or at www.fusionfamilywealth.com.

Jonathan Blau: Hello there, and thank [00:00:20] you for tuning in to another episode of the Fix It Friday edition of the Crazy Wealthy [00:00:25] podcast. Today, I'm going to talk about defining [00:00:30] behavioral investment counseling, and what led me to the thought of having this as a topic for a [00:00:35] podcast is I was at a breakfast meeting with a bunch of CEOs, 30 or so, and at the end of [00:00:40] the meeting, after we had introduced ourselves and telling everyone, uh, there what each of [00:00:45] us does in about a minute or so, a woman came up to me and said, "Hey, let me hear again how that behavioral [00:00:50] inva- investment counseling works."

And I explained it in about a couple of minutes, and she said, "Wow, that's [00:00:55] really interesting." And that comment went through me like a knife, because to someone [00:01:00] who hears behavioral investment counseling and our philosophies after having heard the conventional [00:01:05] wisdom philosophies for decades, what we're telling them is clearly counter-cultural and [00:01:10] counter-intuitive.

But what I said to the woman is, "What I told you sounds interesting to [00:01:15] you, but to our clients who have adopted the philosophy after having been [00:01:20] exposed to conventional wisdom for years or decades, it's changed their lives, so it's [00:01:25] not just interesting, it's life-changing to those who adopt it." And so that's gonna be today's topic, [00:01:30] behavioral investment counseling, interesting to learn, life-changing to live.[00:01:35]

Voiceover: Welcome to the Crazy Wealthy [00:01:40] Podcast with your host, Jonathan Blau. Whether you're just starting out or are an [00:01:45] experienced investor, join Jonathan as he seeks to illuminate and [00:01:50] demystify the complexities of making consistently rational financial decisions under [00:01:55] conditions of uncertainty. He'll chat with professionals from the advice world, [00:02:00] entrepreneurs, executives, and more to share fresh perspectives on making sound [00:02:05] decisions that maximize your wealth.

And now, here's your host. [00:02:10]

Jonathan Blau: I want to fix a misunderstanding that quietly ruins outcomes for otherwise [00:02:15] smart investors. Because when I explain behavioral investment counseling, people do often say, "Wow, that's [00:02:20] really interesting." And I understand why. But interesting isn't nearly strong enough [00:02:25] because when you don't just understand this, when you actually live it, it can [00:02:30] be life-changing.

So today, I want to do something simple. I want to [00:02:35] compare conventional wealth management with behavioral investment counseling so that you can feel the difference, [00:02:40] not just think about it. Let's start with the basics, and that is that most investors start with [00:02:45] what I call step three. A client reminded me recently, quote, "Start, [00:02:50] Jonathan, always with the basics when you're talking to a new investor," and he's right.

[00:02:55] So step one, identify the investor's objectives or goals. Ask them, "What do you [00:03:00] want your money to do?" Step two, build a plan, a blueprint with a high [00:03:05] probability of helping you achieve those objectives. And step three, [00:03:10] then and only then, build a portfolio whose only role is to be a servant [00:03:15] to that plan.

Most investors, and even many advisors, skip steps one and two [00:03:20] and go straight to step three, which is why they ask, "How have you done over the last five [00:03:25] years?" Meaning, how have the investments that you use done for your clients? They're not even interested in talking [00:03:30] about planning. And that sounds reasonable, but it reveals the industry mindset that [00:03:35] success somehow equals outperformance of one investment as compared to [00:03:40] either a benchmark or another investment.

So let's talk about that. Conventional wisdom [00:03:45] has what I call the alpha illusion, and alpha just means the perceived [00:03:50] ability of an investment to outperform a benchmark consistently or another investment. It's an [00:03:55] illusion. The traditional pitch is simple. "Hi, Mr. Investor. Hire me, [00:04:00] Mrs. Investor. I can outperform.

We'll forecast the economy. We'll pick winning funds. We'll [00:04:05] rotate sectors, and we'll time the markets, giving you an advantage of [00:04:10] when to enter and exit, entering before increases and exiting before impending declines. [00:04:15] And we'll do all of those things with a great deal of consistency." And [00:04:20] investors follow that playbook by chasing what worked recently.

But here's the problem: there [00:04:25] is no reliable evidence that anyone can consistently deliver outperformance through [00:04:30] timing and selection, especially not after fees and taxes associated [00:04:35] with trying to do those things. And what's worse This mindset distracts [00:04:40] investors into reacting instead of sticking to a plan.

So [00:04:45] instead of acting on a strategy designed to work over multi decades, they chase performance [00:04:50] and headlines and, uh, constantly change the portfolio holdings in [00:04:55] response. And that's how long-term success gets undermined. Behavioral investment [00:05:00] counseling looks to simplify the portfolio decision. We start with [00:05:05] humility.

We tell investors at the outset, we cannot consistently [00:05:10] control markets. We cannot consistently forecast the economy, and we [00:05:15] cannot consistently select our way to guaranteed outperformance. So once [00:05:20] the plan is built, the investment decision becomes simple. Solve the real [00:05:25] problem, not volatility, but the preservation of purchasing power over [00:05:30] time.

That generally means more exposure to the one asset class that has historically [00:05:35] fought inflation as best as anything, and that's stocks or, or great [00:05:40] companies through ownership of stocks, otherwise called equities. In plain English, be more of an [00:05:45] owner than a loaner, more stocks than bonds, not because it's exciting, but [00:05:50] because it's necessary in a world where inflation, uh, eats away at the value of every [00:05:55] dollar to the tune of three to four percent compounded annually.

So here's the most [00:06:00] important distinction. Volatility creates temporary emotional discomfort. [00:06:05] Inflation causes permanent financial damage. [00:06:10] Volatility is loud. You can look at it every second of every day. It's emotional. While [00:06:15] inflation is quiet, invisible, and relentless. So here's the key. It isn't [00:06:20] rational to replace investments that fight permanent damage with those that [00:06:25] only reduce temporary discomfort.

And yet that's exactly what [00:06:30] happens because we're taught that smooth equals safe, [00:06:35] bumpy equals risky. So we chase smoothness and call it safety. [00:06:40] And I'll say it plainly, we conflate discomfort with [00:06:45] danger. They're not the same thing. Volatility feels dangerous, but it's [00:06:50] temporary. Inflation doesn't feel dangerous because it happens slowly over [00:06:55] time in terms of its impact, but the damage is permanent.[00:07:00]

That's why investors often overweight bonds, because bonds feel calmer [00:07:05] and smoother And the way they're taught, safer. But when they freeze income [00:07:10] and principal in bonds while costs keep rising, what feels [00:07:15] safe can quietly destroy their wealth, their purchasing power, and that's actually [00:07:20] backwards. So behavioral investment counseling flips it.

Safety [00:07:25] equals protecting purchasing power, not eliminating volatility. [00:07:30] Volatility threatens your emotions temporarily. Inflation threatens your [00:07:35] lifestyle permanently. So we refuse to trade long-term protection for [00:07:40] short-term comfort. This doesn't mean bonds have no role. We use them not to control [00:07:45] volatility, but to control when you draw from the portfolio, when you n-need to [00:07:50] start living off of your portfolio by taking distributions through a multi-decade [00:07:55] retirement.

Typically, we build a two to three-year, what we call side pool of spending in [00:08:00] short-term bonds so that when the markets are down, you draw from that side [00:08:05] pool, not from selling off equities with capital gains that are at currently [00:08:10] depressed prices because we're in a down market. That's how you manage what's called sequence of [00:08:15] return risk without sacrificing long-term growth When [00:08:20] volatility makes people uncomfortable, the industry offers [00:08:25] solutions, alternatives, smoother products, non-correlated [00:08:30] strategies.

I call it financial Ozempic, a shortcut to reduce [00:08:35] discomfort. But those often come with illiquidity, opaqueness, [00:08:40] costs, taxes, and all kinds of other [00:08:45] side effects that are not in the investor's interest. So instead of solving the real [00:08:50] problem, they simply mask discomfort. Behavioral counseling does the opposite.

We [00:08:55] solve the real problem and build the discipline to stick with it. Most advisors [00:09:00] can tell you what to do. Stay disciplined. Think long term. That's not the edge. The [00:09:05] edge is helping you to keep doing it when everything in your gut tells you not [00:09:10] to, and everyone on CNBC confirms that. Because if you abandon [00:09:15] the plan, the plan does not matter.

So when people say, "Wow, that's interesting," I think [00:09:20] not strong enough because with the right plan paired with the right behavioral guidance, this [00:09:25] becomes life-changing. The right plan usually requires more equities than bonds, but [00:09:30] success isn't knowing that. It's living it consistently through the pandemics, through the [00:09:35] recessions, through the Trumps or the Bidens, through the tariffs, you name it, [00:09:40] through discomfort, through uncertainty, because this isn't the difference [00:09:45] between knowing what to do.

It's the difference between knowing it and staying wealthy [00:09:50] enough to live the life that plan was meant to fund. Volatility is loud, [00:09:55] visible, and temporary. Inflation is quiet, invisible, and permanent. And markets [00:10:00] do not decide your outcome as an investor. Your behavior does. So don't [00:10:05] hire an advisor to predict the unpredictable.

Hire one who builds a real plan and [00:10:10] helps you stick with it long enough for it to work. Preparedness, not prediction, is what [00:10:15] separates those who participate in markets from those who truly benefit [00:10:20] from them. I hope you enjoyed today's episode of the Fix It Friday edition of the Crazy Wealthy [00:10:25] podcast.

You can get us on fusionfamilywealth.com, [00:10:30] crazywealthypodcast.com, all your favorite venues. And until next time, stay crazy [00:10:35] wealthy.

Voiceover: Thank you for tuning in to another [00:10:40] episode of the Crazy Wealthy Podcast. For more insights, resources, and [00:10:45] to sign up for our newsletter, visit crazywealthypodcast.com. Until [00:10:50] then, stay crazy wealthy[00:10:55]

Disclaimer: The previous podcast by Fusion Family Wealth, LLC, Fusion, was [00:11:00] intended for general information purposes only. No portion of the podcast serves as the receipt of, or as a substitute for, personalized investment advice [00:11:05] from Fusion or any other investment professional of your choosing. Different types of investments involve varying degrees of risk, and it should not be assumed that [00:11:10] future performance of any specific investment or investment strategy, or any non-investment related or planning services, discussion, or content will be [00:11:15] profitable, be suitable for your portfolio or individual situation.

Neither Fusion's investment advisor registration status, nor any amount of prior experience or [00:11:20] success, should be construed that a certain level of results or satisfaction will be achieved if Fusion is engaged, or continues to be engaged, to provide investment [00:11:25] advisory services. Fusion is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice.

No portion of the [00:11:30] video content should be construed by a client or prospective client as a guarantee that he or she will experience a certain level of results if Fusion is [00:11:35] engaged, or continues to be engaged, to provide investment advisory services. A copy of Fusion's current written disclosure brochure discussing our advisory [00:11:40] services and fees is available upon request or at www.fusionfamilywealth.com.