FROM THE BLOG

Frequent flyers are accustomed to unexpected outcomes. Department of Transportation data illustrates that the “on-time arrival” hasn’t exactly enjoyed a bull market over the past 10 years, while delays and cancellations make stated departure times feel more like an aspiration than a reliable expectation. As a society, we’ve not fully adjusted our emotional models to account for this trend – at least based on my less empirical (highly anecdotal) research.

It was a tale of two travelers and one (intended) flight.

Hours had passed since the Dallas departure and there was nothing noteworthy to report, at least until the final descent into Richmond, VA became a second ascent instead. The pilot described any number of obstacles between us and our expectations, the most important of which was that our airport of choice was closed due to severe weather.

Audio fidelity being what it is over any airline loudspeaker, the exact plan from that point was muffled at best, and incoherent to most; for sure it was no clearer than the skies below.

The reactions to both the uncertainty of where we would land and the certainty of where we would not came quickly, but they were hardly uniform.

• Passenger A, in particular, was worked into a fit of rage, to the extent of receiving a medical evaluation. The diagnosis was ultimately something that could arguably be cured with a yoga class, long walk or a tall glass of empathy (none of which were on hand), and so the blaming and ranting continued unabated until we landed; at which point the only thing that really changed was the target of the outrage. If it wasn’t the flight attendant or pilot’s fault for this inconvenience, it was most assuredly the gate agent’s, right?
• Passenger B, on the other hand, slept blissfully through most of the ordeal. After being told our plane was diverted and couldn’t land in Richmond, she disembarked fully expecting to see the familiar sight of the very terminal we had vacated no less than 5 hours earlier. Upon hearing her say, “this sure doesn’t look like Dallas …” as she walked off the jet bridge, I was quick to share the relatively good news, “Oh no, we are in Dulles … not Dallas … this is Washington, D.C.” She was processing in real time this new reality of being just 90 miles from her initial expectation (i.e. Richmond), rather than the 1,170 miles she briefly feared. She was genuinely thrilled and, in contrast to Passenger A, was invited back on the plane for the eventual last leg home.

Here were two passengers on the same flight, each experiencing the same setback, resulting in the same brief-ish stay in our nation’s capital. Despite that, the difference in happiness between the two was as if they were on opposing sides of a three-game parlay ticket this weekend.

Happiness = Reality – Expectations

During Elon Musk’s 2018 appearance on The Joe Rogan Experience, he connected this formula to social media, where carefully curated portrayals of other people’s lives can elevate expectations and diminish satisfaction with our own. Other people’s “best of” photo albums rarely include their toddler throwing a tantrum in a Target parking lot. Instead, they encourage us to expect the Magic Kingdom to be the sole backdrop of our parenting careers. Airport flight boards perform a similar trick, presenting scheduled times with the confidence of family glamour shots on Instagram.

We deal with this simple, yet elegant, formula in our professional dealings every day. Early in your career, the siren’s song of that beautiful backtest might have been too loud to keep hidden from the prospective client. The hypotheticals look so compelling it feels like a breach of fiduciary duty NOT to show it! Meanwhile, an army of product wholesalers question why you would have formative conversations around a financial planning process, balanced growth allocations, or risk management… when it could be on the ticker symbol destined for 30% annual returns stacked as far as the eye can see.

We learn, each at our own pace, that setting expectations for any long-term relationship on the back of someone else’s best glossy is not a recipe for any-term happiness. Reality rarely lives up to the most marketable slide deck at some quarter’s end, and unhappiness often follows. Simply put…

Performance-based selection establishes performance as the psychological scorecard for the relationship.

Many of your future clients are already quite conditioned to chase whatever has performed best most recently. They do not need an advisor to reinforce that commonly futile instinct. Past performance may appear convenient to sell, but client satisfaction (i.e. happiness) in our business is often more aligned with other factors; namely communication and trust. Setting expectations anchored to your process, your people, and the collective ability to navigate through inclement financial weather to still reach their financial goals – that is the psychological scorecard worth owning.

Satisfaction among wealth management clients and frequent flyers may not be all that different. Both depend on trust in an eventual arrival, ideally on time. Our job is not to promise perfect weather or an uninterrupted flight. It is to establish a credible destination, prepare clients for turbulence, communicate when conditions change, and keep the journey aligned with the reason they boarded in the first place.

Take care,

Paul Keeton
Chief Investment Officer

Posted by Prospera Financial