Financial Gerontology 101: Part 1

I am a doctor, not a financial planner or investment guru, but I am stunned at some of the powerful similarities between evidence-based strategies for maintaining health and building wealth. The truth is, good financial and health practices are never adopted by the vast majority of Americans, of if they are, they tend to be abandoned shortly thereafter. Why is that? Because similar internal and external forces are working against your attempts to know about and maintain them. Knowledge about these forces can assist you in navigating your business plan for aging!Here are some of those forces and how they operate:

1. The processes are rarely sexy or expeditious.  By and large, proven techniques for maintaining health are much like the ones proven to keep you wealthy - there are no quick fixes. Both involve work and discipline. Adherence to your plan requires diligence.

2. The best advice is generally free but ignored.  Many proven interventions often fall flat because people believe that something they often get for little or nothing is of no value and probably won’t work. In the healthcare world, proven interventions such as quitting smoking, or exercising regularly are often ignored because people assume that advice which is free, has little value. Data demonstrates the health benefits of these simple interventions that are available to assist anyone who wants to get with the program. Yet, I still see patients who spend tons on unproven supplements but never bother to exercise – and still smoke! Take advantage of every opportunity, regardless of the price tag associated with it.

3. They don’t want you to see the real data.  There are exceptions, but most people who try to sell you financial products would prefer that you didn’t know about inexpensive and uncomplicated products like index-fund investing, term life insurance, and competing financial planners who charge by the hour rather than commission. They want to keep you in the dark for the same reason drug companies don’t want you to know about generic alternatives that compete with their expensive brand medications: there’s little or no money in it for them. Be informed. Generic alternatives can be as effective as brand name medications.

4. Snake oil comes in two flavors: health and wealth.  The tactics employed by swindlers to sell you ambiguous financial products are incredibly similar to the ones used to sell ambiguous health-care products. The claims are equally outrageous and can drive vulnerable people to make irrational decisions out of fear and desperation.

5. Both outrageous health claims and outrageous investment claims can produce temporary insanity in even the most rational people. I’ve seen some of the most hard-nosed, data-driven financial people submit to dangerous and unproven medical procedures. I’ve seen scientists and physicians who in their own work insist on evidence-based medicine and hard data before making any decision adopt some of the nuttiest health-care practices imaginable. Both doctors and financial people throw every last principle of evidence-based reasoning out the window to invest in crazy financial ventures. What’s to be learned here? Fear of poverty and fear of disease both seem to create an emotional short circuit in the brain of otherwise intelligent people, causing them to respond in a way that reminds me of an audience member under the influence of a hypnotist’s suggestive powers.

WHAT CAN YOU DO?:  Immunize Yourself Against Bad Health and Financial Decisions All aside, there are things you can do to minimize emotion or its impact when it seems to be taking over health and money decisions.

• First, recognize when it’s happening. Think about when you’ve made rash financial or health-care decisions, especially ones you’ve regretted. What were the circumstances? Were you tired? Were you “pitched” by someone you trust? Was it at an especially vulnerable moment in your life? The first step to averting a hasty or bad decision is to know when you’re susceptible to making one. My point here is that if you have a general sense about when you’re likely to be solicited, it’s easier to have your defense up so you can avoid rash choices.
• Next, stop or slow the clock. When you’ve identified yourself as at risk for making an impulsive health or wealth decision, call a “time-out” on yourself. Slowing the clock also gives you time to consult with other sources that might have valuable knowledge on the subject at hand.
• Make decisions when you’re at your best. Most people think more clearly at the beginning of the day. Similarly, when you are worried, anxious, or under the weather, it’s no time to be making investment or health decisions. Unfortunately, during illness is often the precise time when many such decisions get made. Be aware of your vulnerabilities.
• Finally, build on your rational strengths. If your left (rational) brain is tending to things in either the medical or the financial sphere calmly, responsibly, and with data, the goal is to try to put the same approach to work in the sphere that is being unmanaged, ignored, or overdriven by emotion. If you remain unsure, my next installment will address how to find a gerontological financial planner.

So, the lessons learned here are relatively straightforward – GATHER YOUR FACTS, EVALUATE OBJECTIVELY, SEARCH FOR ALTERNATIVES, RATIONALIZE DECISION-MAKING AND STICK TO A PLAN. A business plan for aging requires both financial and health related components – and the processes are remarkably similar.