The Beauty of Boring

There was a time when I could not, for the life of me, understand why anyone would watch a bunch of people kick a ball around without using their hands. Soccer, to me, was unbelievably boring.

Like many Americans, I grew up watching sports where something obvious happens every few seconds. Football has downs. Basketball has constant scoring. Baseball has pitches, hits, errors, and home runs. Soccer, by comparison, seemed like a lot of running around for a game that might end 1-0.

Then my son started playing soccer about 20 years ago, and I began to see the game differently.

I started noticing the movement away from the ball, the spacing, and how a defender could stop a scoring chance long before a shot ever happened. I came to appreciate the beauty and complexity of the offside rule and even picked up some of the sport’s vocabulary—the field became the pitch, and cleats became boots.

In other words, I discovered a fascinating world hidden inside a low-scoring game; and that is what makes soccer such a good comparison to investing.

Effective investing can appear to be very boring. You build a diversified portfolio, keep adequate cash reserves, avoid unnecessary risk, rebalance when needed, pay attention to taxes, and resist the urge to react to every headline. Month after month, sometimes year after year, it may not feel like anything dramatic is happening. But that does not mean the plan is not working.

A good retirement plan has a lot going on beneath the surface. Asset allocation, withdrawal strategies, Roth conversions, RMD planning, Social Security decisions, tax management, estate planning, and risk control may not make for exciting dinner conversation. Over time, however, those are often the things that matter most.

The problem is that many investors want the financial equivalent of constant scoring. They want action. They want predictions. They want to “shoot for the moon” (SpaceX reference intended). But excitement is not the same thing as progress.

In soccer, a team that constantly chases the ball usually gets pulled out of position. In investing, people who constantly chase the market often do the same thing. They abandon the structure designed to protect them.

Sometimes the smartest move in soccer is not the dramatic shot. It is the simple pass that keeps possession. Sometimes the best defensive play happens before the other team ever gets close enough to shoot. Investing works the same way.

Most of the time, the smartest financial move is not dramatic. It is staying diversified when one area of the market is generating excitement. It is maintaining enough liquidity, so you are not forced to sell at the wrong time. It is having the discipline to do nothing when doing something would only provide temporary comfort.

That can be difficult because we are wired to notice action. We remember the big market moves, the scary headlines, the exciting stock stories, and the bold predictions. We do not always notice the quiet value of a plan that keeps us from making costly mistakes.

But in retirement planning, avoiding mistakes is often just as important as finding opportunities.

A 1-0 soccer game can be a beautiful thing if you understand what you are watching. A quiet investment plan can be a beautiful thing, too. The goal is not to make investing exciting. The goal is to make it reliable.

Sometimes the best evidence that your plan is working is that it feels a little boring.

 

Fun Fact: The 2022 FIFA World Cup reached an estimated global audience of more than 5 billion people, making it one of the most-watched events on the planet. That means well over half of the world’s population followed at least some part of the tournament, a reminder that soccer is by far the most popular sport in the world. When billions of people are willing to watch matches that may end 1-0, it says something about how much there is to appreciate beyond the goals.

Good soccer fans learn to appreciate what happens between the goals.

Good investors should learn to appreciate what happens between the headlines.

Crossing the Digital Abyss

I can barely remember life without online access to almost everything. I do remember that things were a lot simpler back then, but if I wanted to restock my coffee beans, I had to drive to the store. Now I just point and click and the beans are at my office the next day. Personally, I’m very comfortable with pointing and clicking.

Online access is a tremendous convenience for many people. Today, I want to address the issue of access to digital assets after the account holder’s death. Email accounts, online banking records, cloud storage, digital photographs, websites, and domain names are just a few examples of things people may need to access after someone dies.

For many years, there were more questions than answers. But in 2016, the State of Michigan adopted the Michigan Fiduciary Access to Digital Assets Act, MCL 700.1001-700.1018, often referred to as FADAA. Its goal is to make access to digital assets easier.

Here’s a summary of the important points to know about FADAA if you are trying to gain access and close out a decedent’s digital information:

• Access is based on a tiered system.
  • First, the online tool controls. If the provider has a designation tool set up on its website for third-party access, that designation controls. Google has an Inactive Account Manager, and Facebook has a Legacy Contact. The first thing to do is research what the online provider offers and hope that the decedent completed the succession/accessibility requirements.
  • Second, if there is no online tool regarding succession and access, then the estate planning documents control. Rules and directions about digital access can and should be drafted into a trust, will, and/or durable power of attorney. Make sure your documents contain specific language regarding access to digital assets.
  • Third, if there is no online tool for succession and no estate planning document that controls, then the provider’s terms of service may dictate access. All bets are off if you get to this level because the service provider could make it as easy as providing a death certificate or as difficult as requiring an order from a probate court.

• It is important to understand the difference between content and non-content information under the rules.
  • Content means the actual substance of communication, such as the body of an email, text messages, or similar communications. This is the most difficult information to obtain, and there generally must be clear proof that the decedent consented to access or a court order requiring disclosure.
  • Non-content information is also called catalog information and is not as difficult to access. This information may include who was emailed, the date and time of the communication, and whether a particular account existed. None of the substance of communication is included in this information, and online providers are usually less strict in allowing access to it.

We are now at a point where you need to have an important digital asset discussion with the people who may be entrusting you to administer their estate. Try to go through their accounts with them and make sure you know the usernames and passwords, or where to find them. Don’t forget to get the code to unlock their phone, too. You may need it for two-step verification. You should also walk through the relevant websites with them to make sure they have followed the online provider’s protocol to designate the right person to have access in the event of death or disability.

Fun Fact: The value of a digital asset account can change overnight. At this year’s World Cup, New Zealand defender Tim Payne became a digital asset story almost overnight. He had approximately 4,715 Instagram followers before an influencer picked him as the World Cup’s “least known player” and urged fans to make him famous. Within a few days, his Instagram account exploded to more than 660,000 followers, which is more than the Prime Minister of New Zealand had!

As Simple as Two Taps

There is an old story about a plumber who is called to fix a blocked drain.

He takes a careful look at the drain, fills the basin with water, and listens closely to the pipe for a few seconds. He then walks out to his truck, comes back with a hammer, and taps the drainpipe twice in one specific spot. Instantly, the blockage clears.

“That’s fantastic!” says the homeowner. “What do I owe you?”

The plumber hands him an invoice for $375.

The homeowner is shocked. “Three hundred seventy-five dollars? All you did was hit the pipe twice with a hammer!”

The plumber takes the invoice back and revises it for more detail:

• Two taps with a hammer: $5
• Knowing exactly where to tap: $370

Financial planning is often the same way. The solution is simple, but the implementation is not easy. It takes a great deal of confidence honed by lots of experience.

Many people assume the value comes from picking investments, selecting funds, or finding the next great opportunity. While those things matter, they are rarely what determines long-term success.

The truth is that there are countless ways to grow wealth over time. The stock market has rewarded patient investors for generations. The real risk is not failing to find the perfect investment. The real risk is abandoning a sound plan when fear takes over. And fear will always find a reason.

As we move through the rest of this year, investors may face plenty of unsettling headlines. The conflict involving Iran, concerns about oil supplies, inflation worries, government deficits, and whatever unexpected event comes next could all create periods of market volatility.

That is when a financial planner earns their keep.

Not by predicting the future, but by helping clients remain disciplined when emotions are urging them to do the opposite.

Sometimes the most valuable advice a financial planner gives is surprisingly simple:

“Stay with the plan.”

Just like the plumber, the value isn’t in the two taps. The value is knowing exactly when and where to tap. Simple… but not always easy.

Fun Fact: When Elon Musk started SpaceX, the company suffered three consecutive rocket launch failures. A fourth failure likely would have ended the company. Instead, the fourth launch succeeded in 2008, and shortly afterward NASA awarded SpaceX a major contract. Today, SpaceX launches more rockets than any other organization in the world.

Sometimes success isn’t about avoiding setbacks. It’s about having the discipline to stick with a sound plan when others would have given up.