In this week’s episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, tackles one of the biggest challenges facing investors today: information overload. With news headlines, political rhetoric, and market commentary flooding our daily lives, making sound financial decisions can feel like navigating a maze.
Darryl breaks down the subtle (but critical) differences between mentors, coaches, and consultants – and explains why having a trusted guide can help you stay rational when emotions threaten to derail your long-term strategy.
Key Highlights Include:
• How mentors, coaches, and consultants each play unique roles in your financial life.
• The behavioral traps that can derail even the most rational investors.
• A real-life case study of emotional decision-making during market turmoil.
• How misinformation influences your perception of risk and opportunity.
• Why your advisor should be more than just a financial “consultant”.
Whether you’re feeling stuck or simply want to build a better decision-making framework, this episode offers a thoughtful and empowering perspective.
For more insights or to connect with a PAX Financial Group advisor, visit http://www.PAXFinancialGroup.com.
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Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. So, there’s a little rhyme that I’m going to share with you. We try to choose, but what if we lose?
We’re stuck inside a maze of clues. We try to choose. But what if we lose? We’re stuck inside a maze of clues. There’s a lot of information today. There’s a book on this. And The Information Age is the name of the book, that talks about. I mean, there’s more information than ever, but we’re still struggling to make decisions.
And so, what I suggest to you is you need a mentor. You need somebody that can help get you unstuck in these mazes of clues. You need somebody that can help you get unstuck. Now, I needed to find a mentor, but there’s actually three different roles that sometimes overlap and get confuse mentor, coach, and consultant.
Let me unpack those and then I’ll get into the meat of the content today. But my main point today is I need you to have somebody that can walk alongside of you, that can help you get unstuck. We try to choose, but what if we lose? We get stuck inside a maze of clues. So, if you have a mentor, somebody like you would meet at a coffee shop and they don’t have an agenda.
They just sit down and just listen to you and just try to, you know, guide you and, just almost like a friend. And I’ve mentored, I’ve been mentored certainly, and I mentored others. Mentoring is kind of interesting when you mentor somebody younger than you and that you see them making your mistakes in real time and how hardheaded they are, and you’re like, I’ve done that, and I’m trying to tell you not to do that, and you’re still doing it.
And so, I’ve done it, you’ve done it. But mentoring is a really helpful role to be mentored and to mentor others. It’s refreshing, but it’s very informal. That’s the main point I’m trying to make. It’s like a coffee shop. No agenda versus a coach. A coach generally will have a little bit more of a strategy, like here’s where I’m taking somebody, but one of the elements of a coach and there’s actually a federal coaching association that talks about this a lot more.
One of the key attributes of a coach is, not only, you know, having a strategy, possibly an agenda, but helping you, hear me out, helping you discover the answers. Because if you discover the answers, then you’re likely to take ownership. So, a coach is able to use something called Socratic questioning to guide you through a process to help you discover the answers for yourself.
So that’s the difference between a mentor and a coach. It’s a little bit more formal of a relationship, but it’s important to distinguish. Usually coaches you pay for, mentors are just usually friends. A consultant, on the other hand, is somebody that just tells you how to solve your problem. You want to build a fence, they tell you how to build it.
You want to go on a European vacation. They tell you what to do. They don’t necessarily do the mentoring or coaching thing. Like, think of a travel agent. You go to travel agent, you say, I want to go to Europe, and they ask you some questions. They map it out. Like if you had a travel agent coach, they would say, okay, tell me about your childhood experiences and what’s important to you.
Try to guide you to a trip and maybe a travel agent will do some of that. But for the most part, you’re going to a travel agent or somebody building a fence with a specific objective in mind. Hey, give me direction. I need you to solve a problem for you. And they may add elements to the coaching to make sure that they solve it.
The right way. But generally speaking, a consultant is just there to solve a problem for you. Okay, so we try to choose, but what if we lose? We’re stuck inside this maze of clues and the money is certainly a maze. And I don’t think, I know you need to have somebody that walks alongside of you.
Whether a coach, a mentor, consultant, financial advisor. I’ll tell you how that falls into the role. But I think before we even go there, we have to ask ourselves a deeper question and that’s are we rational with money? Because if we are rational with money, then oftentimes we can do a lot of it ourselves. Rational means that you have a reason.
We have a reasonable basis for the decisions you make about your career, about your life by retirement, about money. It’s reasonable. It’s rational. Irrational means not having a reason, often resulting in decisions based on feelings. Sometimes how we were raised, sometimes of just heuristics and rules of thumb. And many times, it’s subconscious. You know, if you look at the Retire in Texas podcast I did earlier, you go check out the early ones where I interviewed, at least 50 retirees, and we unpacked some of the reasons behind the decisions that they made specifically around retirement.
And you’ll find that many of those decisions were rooted in their childhood, were they rational or irrational. There were reasons, but were they valid reasons. Rooted in facts, data, probabilities. Let me give an example. Smart guy. His name’s Joe. Mid 50s. Good income, solid 401k likes to hit and chase little white balls on a golf course.
Watches all the right news stations to get information. Feels pretty up to speed. You know, puts together good rib eye. You know you’re like oh I know that guy. I am that guy. No, I’m not talking about you. This is just kind of an example. But in the 2000s, when Covid started spreading, you started getting really nervous.
We all got nervous, right? You saw the headlines collapse, crisis, unprecedented uncertainty. You know, all that, like, nervousness stuff. So he, emails the advisor and says, sell it. I want all of it out right now. By the way, you can’t like advisors can’t respond to emails because it could be fraudulent. We got to pick it up.
Pick up the phone, that is. And so, Rachel, will call her Rachel the advisor. We don’t have a Rachel, so I’m keeping this pretty general in nature. But let’s say Rachel, the advisor calls Joe and says, hey, we’ve been down this road before. Let’s just kind of, you know, see how it goes. And he’s like, no, we’ve never been down this road before.
This is insane. It’s a pandemic. I don’t care. I’d rather be broke. This is maybe like, his reason I’d rather be broke than ride this roller coaster. So, like, I’ve had maybe 100 of these conversations before, and they’re very awkward, but we have to honor the client. And Rachel in this situation has to honor the client’s request.
She can push back a little bit to try to keep them from making bad decisions. But at the end of the day, it’s Joe’s money, so she has to sell it. After pushing back, Joe sits in cash and like a cruel twist from like a Netflix drama, the market bounces back and it keeps going up and up and up.
At the end of the year, the S&P 500 will be up 16% and Joe is still in cash. He had 850,000. He sold it and it’s now worth 750,000. Just like that 100,000 is gone. Joe’s favorite new phrase why didn’t anyone stop me? Or you know, I don’t believe in the markets. I always lose money in the markets, man.
Joe was a rational person, is a rational person. He had a plan. He had a strategy. And then all of a sudden his amygdala got hijacked. Cable news, I say cable news. Really. All of it’s designed to sell like fear. We hear if it bleeds, it leads. And so even though we are rational, we think we’re rational.
Like, I’m educated. I’m. You know, I consider myself mostly rational, but we’ve got to admit that there’s times we’re just not, a good example is this when it, you know, we study behavioral finance, which is the collision of neuroscience, psychology, and traditional finance. And this confirmation bias exists where we just seek out information to just, you know, information that supports our prior beliefs and values.
And so, in Joe’s case, I would imagine he discounted any information that might be contrary to what his gut was telling him. And I bet Joe had made some pretty good business calls in the past. And he probably, you know, has a solid track record of being a pretty successful dude. But he, you know, that skill set, the environment was such that he was leaning on his gut and information that he had gathered from friends and from colleagues and from headlines.
And he very likely refused to look at the alternative information because he just I mean, it’s that’s just what we do. We just have this confirmation bias in us, and it’s very hard to seek out alternative information. Another one that I think is worth unpacking is this environment of misinformation that exists today and how that impacts us and how we think that it doesn’t.
So, we think we’re rational. But this misinformation gets to us, and it gets to all of us. Let me give, kind of an experiment here conducted by Loftus. Participants were shown a video of a traffic accident. And after watching the clip, the participants were asked a number of questions about what they had observed.
Much in the same way, like police officers and accident investigators and attorneys might ask questions to eyewitnesses. So, one of the questions asked was, how fast were the cars going when they hit each other? So, in some instances, however, a subtle change was made and participants were asked how fast the cars were going when they smashed into each other?
So, they replaced the word hit each other with smashed and just see if the participants recalled the accident differently. So, a week later, the participants were asked again. A series of questions, including did you see broken glass? And most of the participants correctly answered no, but those who had been asked the smashed version of the question in the initial interview were more likely to incorrectly believe that they had indeed seen broken glass.
So, this minor change, relatively minor, significantly changed how witnesses saw the events. And so, this is the power of misinformation. The phrase that I keep catching over and over again. Maybe you will. Maybe you already have is the threat to democracy. That is the phrase that’s being used a lot. So, I just want to challenge you, whatever your political will, and ask yourself, is this a phrase that’s intentionally designed to manipulate behavior?
Because that happens a lot where I see this same phraseology use over and over again, and it appears to me whether it’s done intentionally or not, there’s a collective group of people that are trying to influence, whether it’s votes or the way we make business decisions. There’s an example, and I’ll put a link into this. It’s called 50 examples of Fake News in 2024.
Very interesting. But we have, you know, a history of this misinformation from Nicholas Salmon to Jesse Smollett to Bubba Watson to, the whips in the Border Patrol. There’s a lot of misinformation where we originally get this emotional shock, and then we’ll anchor to it and we’ll discount any facts associated with this. And we’re just all falling for it now.
We’ve got to be better about it. It’s really hijacking all of our amygdales. It’s affecting our voting and our buying or selling and our investments. The headlines that are often used. Bloomberg. Often use very dramatic market sinks today – headlines. And I look and it’s down just a little bit. I was looking at some headlines from Time Magazine, March 13th, 1972.
The headline, the cover of March of that magazine, 1972, Is The US Going Broke? Which could be the same message today. But imagine in 1972, somebody making a decision, a rational person saying, I’m not going to invest in the markets because the US is going broke. They would have missed out on decades of returns that really mattered to not only their future income, but also their legacy.
So, can you train yourself to be rational? Yes, I think you can. I would like to think I’ve done a lot of work on myself to be rational. But I don’t want to be so arrogant that I’ve mastered anything. Because even if you’re rational and you’ve got a lot of experience, we still get busy with life.
And so sometimes if we’re just in the middle of craziness chaos, maybe it’s weddings or family members that are sick and you’re busy and you’re forced to make decisions. Sometimes your body’s just not equipped to make those good decisions. That’s why having a mentor is so good and having an advisor or coach. So that way if you’re busy and you can’t figure it all out, you can’t handle it all.
I mean, again, we try to choose what if we lose? We’re all stuck in this maze of clues. So, having a somebody that when we’re stuck, we can go to is really helpful. Or what if, like, we get older and we just have cognitive decline. So, we may be rational, but just maybe just not memorizing or recalling things as well.
So, a rational person can be subject to bad decisions. So don’t discount that. That’s why a coach is somebody to have in your life is really important. They say it’s hard to love with a toothache. I don’t know if that resonates with you because you’re just thinking about your tooth all the time. It’s hard to invest when you’re not at your best.
So, think about that. And even if you’re rational, just kind of preparing for those moments in life where you just don’t have it all together. So, I think if you agree that, you know, there’s a degree of irrationality that we all have, and then if you agree that having a mentor in your life is good, then I need to make sure that you’re introduced to how we think about being an advisor in your life is maybe differently than what you have thought about in the past.
You often thought about an advisor being a consultant, meaning that you come to us and you say, okay, I need to convert, or I need to know how much I can contribute to my 401k. And we, you know, we do a Google search or whatever and we tell you how much and you say, well, is there anything I’m missing?
And we tell you no. And that’s just like just trading information. But I feel like our role as advisors have changed materially over the years. And so, the way we think about it is depending on your situation, your circumstances, how you receive information, we could be a teacher, a boss, or coach any time in your life. So sometimes we’re a teacher where you come to us and you say, I need to convert my Roth IRA to a traditional IRA.
That’s what I heard. I don’t know how it works. You’re going to find that we do have a heart of a teacher. We’re going to sit down and explain this to you in such a way that we don’t talk down to you or talk over you. That’s something that we pride ourselves in. And I think a lot of people have given us feedback over the years that we do a good job there.
You might say, I don’t know the difference between a stock and a bond. We’re going to have a heart of a teacher and we’re going to explain to you, I don’t understand what the difference is between a mutual fund and an exchange traded fund. We’re going to have a heart of a teacher and teach you. So, sometimes the role that we play is of a teacher.
Sometimes we have to be a boss. Sometimes we have to tell you, you need to sell that home. The mortgage payment and all the expenses are above 25% of your take home pay. You can’t afford it. You’re struggling everywhere else. I’ve told this to a client before. I thought they were going to fire me.
I thought the spouse was going to fire me. They didn’t. They sold their home and they’re much happier. So sometimes we have to be a boss and sometimes we have to tell you what to do. That’s a tough one. But I hope you know that that’s an important role that we would have to play. Sometimes we’re cheerleaders, sometimes we’re teachers, sometimes we’re boss, sometimes we’re cheerleader.
Hey, you need to save 10%, and then we’ll push you. Hey, next year, we need to say 15%. In the next year, we need to move to 20%. We just need to encourage you, you know, if you need to get a part time job, if you need to buy an RV because you need to spend your money retirement, we’ve had to encourage people to spend money in retirement.
Sometimes we just need to be a cheerleader and reinforce, hey, the data supports that you can do this. I want to encourage you to do it. So that’s the role that we play. Very much of a coach, oftentimes as a consultant and we think about this deeply. We study the Enneagram, we study disk personality profile, strength finders, we study behavioral finance very deeply.
We do books. Book Studies is an organization to really, truly think deeply about how we can help all of us as irrational, or rational people in the midst of all the noise and make better decisions. Because I think if we can do that well, I think we’ll get the outcomes that we need to not outlive our money and leave the world better than we found it.
Because at the end of the day, we try to choose, but we’re afraid we’re going to lose because we’re all stuck inside a maze of clues. So, hire a guide today. Hopefully it’s an advisor at PAX Financial Group and you will get unstuck. Remember, you think different when you think long term. Have a great day.
Resource:
https://www.justfactsdaily.com/50-examples-of-fake-news-in-2024
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