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Transcription of interview with Margie Warrell on January 20, 2014.
Douglas Goldstein, CFPÆ, Financial Planner & Investment Advisor
Margie Warrell is a bestselling author who wrote the book called Stop Playing Safe.
She is an executive coach and has worked with companies like Best Buy, British Telecom and
NASA.
Douglas Goldstein, financial planner & investment advisor, interviewed Warrell on Arutz Sheva
Radio.
Douglas Goldstein: You tell people to stop playing safe.
My mother taught me always to play it safe and you are a mother?
So whatís the difference between the two of you?
Margie Warrell: We donít want our kids to take foolish risks, we donít want them to
be hurt and find themselves in situations where bad things can happen to them but I
think weíre very conditioned to play safe and weíre naturally wired to be risk averse.
However, in the big game of life, there is nothing worthwhile that canít be achieved
without taking a risk and itís my very passionate belief and certainly my experience working
with a lot of people and organizations that its peopleís reticence to take risks, their
unwillingness to lie themselves on the line that ultimately can hold them back in the
most profound ways, professionally and personally.
Douglas Goldstein: Day to day Iím talking to clients about how to invest their money
and financial planning and I feel itís my responsibility to tell them to be careful
because people love taking risks, they get excited about it, but then frankly and statistically,
people who take risks through investments usually underperform the markets significantly.
How do you see the two ideas going together?
Margie Warrell: Obviously, when it comes to money, itís very emotional and when it comes
to assessing risk what we know is that people are not always very accurate in how they judge
risks and when thereís a lot of emotion involved particularly when itís something like making
a quick dollar or get rich quick thing.
Everyone wants to find some way to make a lot of money in a little amount of time.
But we arenít always very good at assessing risk accurately so itís really important
to make sure you do run the numbers, you do your due diligence and that you donít let
emotions run the show, whether itís the emotion of great in trying to get something extra
for nothing or itís the emotion of fear of avoiding putting ourselves in situations where
we could actually benefit.
Douglas Goldstein: I spoke to Daniel Kahneman who won the Nobel Prize in Economics and this
is a big topic of what he discussed.
He pointed out that the fear and greed which you are referring to is that his study show
that people tend simply to act much more based on fear than on greed, meaning if there are
two choices, theyíll prefer to run away even if thereís a possibility to make money.
Is that what you found as well?
Margie Warrell: Absolutely and Daniel wants to share this with you, losses looming larger
than gains.
We tend to be far more focused on what we have to lose, that fear emotion of ìIím
afraid of what I might lose here than on what we have to gainî which can obviously sometimes
be a big grade but all of the times, itís really just about making a change in our lives
and doing something that will ultimately really serve us.
I believe that fear is the most potent emotion and itsí the one that can ultimately undermine
our decisions and our actions in the biggest way.
For anyone that Iím working with in my work whether itís with people who are in organizations
or people who are starting out with an entrepreneurial venture.
Get really clear about what is it that you really want, whatís the vision that excites
you, what is it you want to achieve then what is it you need to do to get into action to
creating it.
Thereís always going to be risk involved so we have to assess the risks, what can I
afford to lose.
But also what we often tend to do is we discount the cost of inaction and we tend to kid ourselves
that if I do nothing, if I stick with the status quo, things will sort themselves out,
it will just get better, itís what people just keeps spending money that I canít afford,
putting on my credit card rather than paying something off.
They donít want to have to have that paying upfront but down the track, we end up in a
worst situation.
I think itís always really important to know.
Thereís also a risk associated with inaction.
Douglas Goldstein: What Iím understanding from you is that youíre not telling people
just to go out and be risky but rather to assess the risk and make a decision based
on the facts rather than simply letting their emotions guide them?
Margie Warrell: You have to assess the risks but too often my experience is that people
actually donít take risks they need to take.
Itís not about taking stupid reckless risks, itís about taking smart risks but knowing
that if you donít put something at risk, youíre not going to be able to move forward.
When I talk about risks, Iím not just talking about financial risk, a lot of my work is
around social and emotional risk.
We donít want to risk our reputation, we donít want to risk our pride being hurt,
we donít want to take on a great big role in case we fail at it and then we humiliated.
So with the different types of risks, I think itís really important to distinguish
that too.
Douglas Goldstein: What is the paradigm of a risk taker look like to you?
Margie Warrell: I think itís really important to be clear that we all have different personalities
and aspirations so what taking a risk could be for me might be very different to somebody
else.
I think itís hard to say a risk taker is to label of being sort of [inaudible 0:07:29]
person.
We think of big groups and the crazy risky things.
People think of Richard Branson, the [inaudible 0:07:36] entrepreneur but I think we all need
to be risk takers even people who are quite cautious can still be risk takers.
Itís a bad thing willing to put ourselves in a situation where weíre vulnerable to
losing something we value.
We can mitigate risk and we can manage all of the factors around but in the end we have
to put ourselves in a place where we are vulnerable to losing something we value whether itís
money, pride, reputation, you name it, itís putting something on the line that we value
and thatís the core of what a risk is.
When it comes to making investment decision or change of life decision, with [lifeís]
possibility, we could give something up and lose something that we value.
Douglas Goldstein: As a financial advisor, I know on paper what a reasonable investment
strategy for a client might be and letís say it includes taking a fair amount or market
risk or volatility risk and yet I see that the client is risk averse.
There are two issues one is should that be encouraging the clients to actually take the
risk and if yes, whatís the best way to teach someone that itsí okay to take these risks?
Margie Warrell: What comes to mind is like how much can you afford to lose or how much
are you comfortable
with losing.
It was easy to take risks, everyone who would be taking them and obviously not everybody
is and some people are naturally more risky because some people are comfortable with losing
money than other people are.
There are various different reasons but I think being really clear here, one, whatís
the probability that you might lose because often we donít assess that accurately so
really letís look at this, whatís the probability, thereís always a probability but are you
overestimating that probability because often we overestimate the probability that we could
lose something.
Not everyone, some people underestimate it but that may well be the case for someone
who is quite cautious.
Two, if you donít invest, if you keep your money in your 2% interest bearing account
in the bank, are you comfortable with that outcome?
Is that something youíll feel okay about if youíre doing nothing?
Often helping people get [present too], actually no Iím not okay with that.
That can be enough to have people go ìYou know what I am willing to put something riskier,
maybe not a whole lot, maybe just to [inaudible 0:10:36] it and then people diverse and use
lots of different investment strategies but I think just sort of looking at those two
factors.
Douglas Goldstein: The other thing that Iíve noticed with a lot of people is that those
who are more charitable gave away 10-20% of what they earned and Iíve noticed that these
people often are the richest people that I work with and they seem to view money differently.
My theory is simply that when you feel the money is not really yours when in any case,
youíre going to be giving away a lot, you get a different view of money, have you found
that as well?
Margie Warrell: You can look at money through lots of different energies.
What is money and I know for me as Iíve got older, Iíve got much better.
I spent time in Israel when I was 22, staying in the cheapest possible accommodation I could
find because I had no money and I certainly didnít grow up with much money so I had to
really shift my paradigms around money in my 20s and 30s but when it comes to money,
money itself gives you nothing.
Itís what you can buy with the money or try with the money and I know when we had a positive
energy around money, itís not about being flippant or foolish with money but knowing
that if you purchase something, somebody else has been affected, now that guy who has the
cafÈ, he just made 6 bucks from you because you bought coffee and muffin or something.
Itís not just about trying to keep as much money for yourself because we know thereís
a lot of very wealthy people who are really miserable people and those you said that tied
a lot of money and ease that mindset of giving of abundance of not being stuck in scarcity
mode and Iím sure those people are not foolish with money.
They are generous with what they give it to and very intentional about it but they have
a real freedom around their finances and their wealth and the money.
Douglas Goldstein: How can people learn more about the work that youíre doing?
Margie Warrell: I send out a newsletter every month or so called Live Boldly and people
can sign up for that on my website called www.margiewarrell.com and they can follow
me on Twitter @MargieWarrell or on Facebook or connect on LinkedIn.
Feel free to grab a copy of either my books, Stop Playing Safe which came out this year
with Wiley or Find Your Courage which I wrote a few years back with McGraw Hill.
Douglas Goldstein, CFPÆ, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel.
Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA,
SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
Disclaimer: This document is a transcription and/or an educational article.
While it is believed to be current and accurate, divergence from the original is to be expected.
The original podcast can be heard at https://sites.google.com/site/goldsteinradioshows/.
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sole basis for making financial decisions.
The opinions rendered herein are those of the guests, and not necessarily those of Douglas
Goldstein, Profile Investment Services, Ltd., or Israel National News.
Readers should consult with a professional financial advisor before making any financial
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