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Dana Anspach

Mind Meld

By January 20, 2013

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I don't know about you but I have times in my life where I truly wish I had one particular non-human talent, a talent possessed by Vulcan's, of the Star Trek show; the talent of mind-melding. On the show the mind meld was a telepathic link between two Vulcan individuals, allowing for the exchange of thoughts.

In so many cases, wouldn't it be so much easier if we could mind-meld? The other person could instantly see your thoughts, your experiences and exactly what you did or didn't do. It would certainly save a lot of wasted public resources in the form of litigation.

This mind-melding talent would also be useful in working with clients. There are so many times when I tell someone something I know to be a fact, and yet they do not believe me. They don't know what I know, so they are skeptical.

For example, it is a fact that finding mutual funds in each asset class that have the lowest fees is going to be the best way to pick funds that are likely to have the highest future performance (as measured over the long term). Yet people continue to pick mutual fund based on past performance, which has proven to be an indicator that is significantly less relative to future performance.

It is also a fact that planning your retirement on rates of return that may or may not be achievable is risky. This raises an interesting point that several of us retirement income geeks were debating via email over the past week. How do you compete against a lie?

If one advisor tells you that an age 62 retirement is achievable, and the next one tells you it is not, how do you know who to believe? Unfortunately our human tendency can be to believe the one who tells us what it is we most want to hear. I'd caution you against this.

A better way to get answers is to compare the assumptions that each used. You want your retirement plan based on a conservative set of assumptions, not a best-case scenario.

It also helps to understand what is and is not realistic. I provide an overview of this in What is a Good Return on Investment.

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