Perception as Reality: Notes from the Schwab Conference

More than 2,000 financial advisors descended upon Washington, D.C. last week to learn and network.  A number of keynote speakers had very interesting things to say -- the others were politicians.  (Seriously, the chances of Washington insiders saying anything of interest to a large, varied audience, with the cameras rolling, is nil.)

A common theme among the many talks was how we are constrained by our preconceived notions.


  • John Diehl -- You may think that an anxious person would seek relief from his/her anxiety, but this not necessarily true.  We actually seek out information that confirms our worries.  Diehl points out, for example, that CNBC viewership increases when the stock market implodes and wanes when the market is doing well.  Moreover, there is a physiological component to anxiety -- we experience tunnel vision, reduced hearing, and a lower capacity to learn.  Fear thus manifests itself in ways that keep us bound by our current perceptions instead of seeking out alternative ways of thinking.
  •  Daniel Pink -- Many people have a negative view of sales people and selling.  Pink argues that we are all engaged in selling, which he defines as persuading people to give up something of value in return for what you are offering.  The value need not be monetary; it can be time, for instance.  From this perspective, selling includes asking a co-worker to help you with a project or inducing a teenager to engage in responsible behavior.  (Good luck with the latter.)  If everyone is engaged in sales, then maybe selling isn't such a bad thing.
  • Dan Tapscott -- Those of us who did not grow up in the digital age tend to think that the younger generation passively gazes at their smartphone oblivious to the world around them.  Such a view may be biased.  Tapscott believes that today's generation is involved in the world, they just do so via the internet and social media instead of newspapers and television.  These new modes of communication aren't necessarily a bad thing (except for texting at the dinner table).
  • Peggy Klaus -- Substance should rule the day in our interactions with people.  But according to Klaus, our initial focus is on various aspects of physical appearance (55%) and the tone, pitch, and speed of a person's voice (38%).  This leaves scant room (7%) for content.  In this instance, our initial, superficial perceptions may play too large a role.
  • Michael Lewis -- In his book, and later movie, "Moneyball," Lewis showed how the Oakland Athletics, constrained by limited financial resources, excelled at finding baseball players on the cheap by ignoring obvious, surface defects and focusing on key  statistics that indicated a player's true value.  Lewis shows us how we have to work hard to overcome our perceptions.

These lessons apply to the world of financial planning and investing as well.  It is important to remember that our biases can impede our ability to accurately judge the situation.  What appears to be obviously true may, in fact, not be so.

Words of Wisdom

Everyone looks [dumb] once you set your mind to it.
-- David Sedaris