Good Planning is About Temperment

Many feel that financial planning, investing, and tax mitigation is an intellectual process. One that can only be done by an elite few with several degrees and letters before and after their name.

This is about 10% true… The process does require expertise. I’ve spent two decades acquiring mine and will spend the next four decades getting better.

But successful planning is 90% temperamental.

And the reason why SO many wealthy and middle class folks have a financial planner is because of one NON-financial fact: Human nature cannot and does not generate the requisite temperament.

Why we have a temperament problem

(by that I mean demonstrating it empirically with scientific process)

In my mind, the following is the most important contribution to the financial sciences in the last 50 years.

I’d date it to a 1970 paper by Daniel Kahneman and the late Amos Tversky. They observed that people’s “intuitive expectations are governed by a consistent misperception of the world.” Ironically, over the last 50 years, there has been an almost infinite increase in the information available to investors. And yet… No change in his behavior 🤔

Just look at DALBAR’s QAIB study, published annually since the mid-1990s.

Here’s the point: Investor education does not work.


Human nature operates such as to cause the investor not merely to underperform the markets, but, by a significant margin, underperform their own investments.

The logical conclusion

  1. There is no possibility of lasting financial success without an excellent plan, which can only be created by an excellent planner.
  2. Once a plan is in place, our paramount function (as planners) is as behavioral coach, helping clients not blow the plan up, as we are consistently hard-wired to do.

This may seem like an undesirable conclusion, but the data is overwhelming. When you see a success story from one person, you are seeing a rare event. These events are also short term. There are very few people with a self directed investment strategy that they maintain for 3-4 decades successfully. A by very few, you can count these people on one hand.

The answer that has served 99.99999999% of us since WWII has been traditional investment strategies in partnership with a financial planner who is ultimately… boring.

EQB Strategy’s advice is never too exciting. And it shouldn’t be. What’s exciting is you having the income you need and want in retirement, every month, without fail.