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Little Johnny

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2StepsFwd1StepBack
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quote:
Originally posted by fast
quote:
Originally posted by 2StepsFwd1StepBack
It's all about education and proving to someone that the impossible is possible.
I disagree, but let me be clear on exactly what it is I disagree with.

First, Coaster highlights an excellent distinction, and that distinction is the difference between stupidity and ignorance. Just as there's nothing a doctor can do for the patient whom has already passed, neither can we do a whole heap for those that are stupid; however, there is a cure for ignorance, and the cure for that is knowledge, and one way to acquire one brand of that is through education. Make note, by the way, that in the very last sentence of my opening post, I reiterated (and my point is that I reiterated) that I am a bit ignorant myself when I said, "not so knowledgeable." I never said that Little Johnny is ignorant.

But, didn't I say that Little Johnny isn't bright? Not exactly. What I said is that "Some people say that Little Johnny just ain’t all that bright." And, say it as they might, that doesn't make it so, not even if they say it three times (as once was famously remarked).

So, what do I disagree with then? It's not all (all, you said) about education. Interestingly enough, I even went so far as to point out that Little Johnny knows better. Education isn't his issue. Knowledge isn't his issue. Little Johnny isn't stupid (even though others may think he is). Recall the very first paragraph where I explicitly state what he knows he should and shouldn't be doing. The problem with Johnny is a behavioral problem in spite of his knowing better.

For clarification purposes, let it be understood that people living on the edge are not necessarily the Little Johnny’s of the world. Many of those people just might be better off should they decide to the follow the most often touted advice.

What captures my attention is how good advice seems to be offered as if it’s a one size fits all phenomena. It’s hard to put in words. Maybe this’ll help: What might ordinarily be good advice for a novice driver that finds herself skidding around a wet corner on a back road may not necessarily be the best maneuver that a seasoned veteran should take, but I don’t think the best advice (what we would tell the veteran) is what we should tell the novice, not because we should withhold the best advice from the novice but because the novice doesn’t have the skill-set to handle what happens when the best advice is acted upon. In the same vein, we shouldn’t tell the Little Johnny’s of the world to change their W4’s without at least explaining the dangers. We harp on the advantages of doing what we think is best, but along with doing what we think is best sometimes comes the need to change other things (like not spending more than we make with the newfound money); otherwise, there will be no cushion to protect us from our failed behavior changes come tax time.

Dave Ramsey says to temporarily stop your 401K contributions to speed up the process of getting out of debt more quickly, but even he thinks it’s a bad idea to stop it if it’s not going to be a temporary thing. So, whether you should stop your 401K in this case depends. Never mind what it depends on. What’s important to my point is that it depends.

In my conclusion, I find that what advice is the best advice is not necessary truths but rather contingent truths, that will depend on other factors—that render what’s touted as good advice purportedly good advice.

Of course, this is coming from me, a person who doesn’t really know a hill of beans about giving financial advice. Fun learning it though!

Oh, before I forget. Back to your sentence. Recall, you said, “It's all about education and proving to someone that the impossible is possible.” I’ve already discussed the “it’s all about education” part. As to “the impossible is possible,” and to the surprise of many, that may not necessarily be a contradiction since the words are ambiguous and thus might not have the same referent. But let’s not go there. Funny you should mention, “proving to.” For your amusement purposes only, there is a difference between “proving to” and “proving that.” Seldom does a logician find a need to prove to someone that an argument is sound, for example, as that’s a matter of psychology. “Proving that,” on the other hand is what his job is all about, as an argument is sound independent of what others might happen to believe.


So what you are saying is that Little Johnny is neither ignorant (which can be resolved through education) nor stupid (which may have no resolution); rather, he is knowingly avoiding doing what is right because, as Ingenious points out, LJ rather have a shiny set of wheels with a huge note so he can attract the girls. Then I would agree with your disagreement that “even the impossible is possible” because LJ doesn’t even care.

Then, again, remembering back to my clubbing days back in my mid 20s, my pick-up line of “I’m maxing out my 401k contributions so I can benefit from my employer's matching program” never had as much success with the women as did my shiny, new Mustang Shelby. Twisted Evil

Edit: Er... I meant "Shelby Mustang". I really did own one. Really! Laughing
Post Mon Feb 20, 2012 11:19 pm
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fast
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quote:
Originally posted by 2StepsFwd1StepBack
So what you are saying is that Little Johnny is neither ignorant (which can be resolved through education) nor stupid (which may have no resolution); rather, he is knowingly avoiding doing what is right because, as Ingenious points out, LJ rather have a shiny set of wheels with a huge note so he can attract the girls. Then I would agree with your disagreement that “even the impossible is possible” because LJ doesn’t even care.
It’s not that he doesn’t care.

This is more about the advice giver than the advice receiver.

If the advice-giver cannot see that Little Johnny isn't going to do better and change his ways and not live beyond his means, then I won't give a look of disapproval when the advice-giver tells him to adjust his withholdings in such a way that will result in his receiving a very small and virtually insignificant refund.

However, if the advice-giver does know, or (and you'll love this) or if the advice-giver should know that people like Little Johnny (i.e. people who not only live on the edge but also show no signs of changing their ways despite their knowing better), then I think it would be well-advised not to rush to bat with what is often touted as not only good but the best advice; the refund can no longer act as a safety net for those that make unwise decisions if the refund is changed from enough to help them play catch-up to virtually nonexistent.

Whether Little Johnny deserves to fall into financial ruin if he doesn't change his ways is irrelevant. What is relevant is whether or not advice givers should knowingly espouse what is ordinarily good advice when they have very good reason to suspect that the advice-receiver cannot handle the additional requirements that must accompany the supposed good advice. See, if the advice is both given and followed, then financial ruin is more likely if the person follows the advice yet fails to change his ways.

You don’t tell a person to drain a pool if you know they’re gonna keep diving in it. They would have been better off had you never said a word. You explain to them that they must not dive in if you take the water out. Tell them to take out a little water and not to dive and see if they do. We can be so quick to set people straight without taking to time to see that we’re not dealing with computers; we’re dealing with living, breathing people, and not all of them can alter their habits in the time it takes us to wink. We should warn them of the dangers and pitfalls of taking what is ordinarily good advice.

Okay, that was a bit melodramatic, but my real intention is to just hone in on what has captured my attention—and that is the times when good advice is not always such good advice when such purportedly good advice is followed in isolation to other changes that should be made but aren’t. Something like that.
Post Tue Feb 21, 2012 1:54 am
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coaster
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Some good points, there fast. There's no point giving advice when you know the advice isn't going to be followed (other than covering your own professional ass, of course). Giving advice is much like teaching. The teacher has to know what level the student is on, then teach the student the next thing the student needs to learn. If you go immediately to the final lesson in the syllabus, it's all going to be lost even if the student is willing.

So you can't really fault the advice-giver when the advisor knows the advisee isn't at a high enough level to accept the advice; the advisor has to lay down the basics first, which might mean advising the advisee something less than what's really needed, but IS something the advisee will actually understand and do, and see results, and then come back for more.

~Tim~
Post Tue Feb 21, 2012 2:05 am
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quote:
Originally posted by coaster
There's no point giving advice when you know the advice isn't going to be followed [...].


Yes, but now we're not talking about Little Johnny. See, Little Johnny not only received the advice; he followed it as well. What was he told? He was told to adjust his withholdings. What did he do? He adjusted his withholdings. He followed the advice. Now looks where he's at. He's filing bankruptcy. And why is that? Because his bills got so far behind he couldn't catch them up like he always could. Why not? Because he had no large refund to pull him out of his jam like it had always done before. Why didn't he? Because he followed the advice given to him which resulted in him not having a large refund.

The assumption the advice giver made was that he wouldn't fall behind on his bills if he had the money to pay his bills throughout the year. The assumption was faulty. He did fall behind, and what peaks my curiosity is why on Earth couldn't the advice giver not see that coming? In fact, isn't it more the exception than the rule that people will stop misbehaving with money after they choose to adjust their withholdings? After all, one hasn't much to do with the other, so I don't see why a person who would follow such 'smart' advice will all of a sudden (and therefore) change his or her financial misbehavior—which seems to me to be more crucial since following the advice directly leads to the loss of the safety net.

The best advice isn’t the advice that puts someone closer to financial ruin, so advising someone to adjust their withholdings without good reason to think they have the wherewithal to adjust their others issues accordingly makes for a less better off scenario.

Or at least that’s the ingredients for an argument that could be put up for examination.
Post Tue Feb 21, 2012 2:52 am
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ehhhhh.....I think that's extending the OP by introducing new assumptions that weren't assumed in the OP, don't you think? Fine for extending the discussion into a new turn, yes, but I think given the assumptions made in the OP, it couldn't be forseen that Johnny was going to blow the extra money he got in his paycheck, knowing full well that he was NOT going to get the big fat refund he'd gotten in previous years. And I'd like to think that any professional advice given Johnny to reduce his withholding would make it clear that he wasn't getting any more money, he was just getting it along the way instead of having to wait for it.

The circumstances leading up to Johnny's bankruptcy can't be blamed on the advisor and the advice given, because, frankly, the consequences suffered assume a level of irresponsibility or stupidity on Johnny's part that's astounding, and it would have to be the former, because the latter was ruled out by the framework of this discussion, and the former leads full circle right back to my views about education's and society's responsibilities in producing a financially responsible member of society by encouraging, training, and developing an individual's ability and desire to ask "what if?" regardless of whatever advice may have been given, because that individual will want to, and will, figure it out for himself/herself. Smile

~Tim~
Post Tue Feb 21, 2012 5:27 am
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quote:
Originally posted by coaster
ehhhhh.....I think that's extending the OP by introducing new assumptions that weren't assumed in the OP, don't you think?
Got an example? Well, besides the bankruptcy part, that is; that was mainly added for emphasis to drive home the point.

quote:
Fine for extending the discussion into a new turn, yes, but I think given the assumptions made in the OP, it couldn't be forseen that Johnny was going to blow the extra money he got in his paycheck, knowing full well that he was NOT going to get the big fat refund he'd gotten in previous years.
Couldn't be forseen?! Most of the opening post was geared towards seeing that it could be foreseen.

In the first paragraph, I talk about what he knows (both what he should and shouldn’t be doing), yet I express that (still), he isn’t changing his ways and merely makes it paycheck to paycheck. In the second paragraph, I give signs that he won’t change by talking about the budget he never does. I paint a dismal picture for his current behavior and thoughts. Does it sound like he has the makings for changing his ways? In the fourth paragraph, I down right explicitly state that he would in most likelihood spend more money.

quote:
And I'd like to think that any professional advice given Johnny to reduce his withholding would make it clear that he wasn't getting any more money, he was just getting it along the way instead of having to wait for it.
You make not only an excellent distinction but an excellent point! The distinction shouldn’t go unaddressed either. We would (and should) hold the paid-for advice giver to a higher standard. It’s generally accepted (I would imagine) that we will hold the amateur harmless in most circumstances. And yes, we would expect the professional to have some level of fiduciary duties and be more comprehensive in his financial advice.

quote:
The circumstances leading up to Johnny's bankruptcy can't be blamed on the advisor and the advice given, because, frankly, the consequences suffered assume a level of irresponsibility or stupidity on Johnny's part that's astounding, and […].”
Astounding? You’re such an optimistic!

As to blaming, well, I can blame you for the fact it’s raining, but of course, I get what you’re saying. We shouldn’t blame the amateur advice-giver; besides, like you said, there is a significant level of irresponsibility not on the part of the advice-giver but rather the advice-receiver in this case.

My mistake, I think, has been to put a shade more responsibility on the advice giver than is common.

Back to the astounding part: Astounding? Really? That’s another problem with smart people. They just don’t grasp the severe level of, uh, well, um, let me put it to you this way: I had a teacher that once used the phrase, “misplaced admiration” to describe the admiration I had for another. To be so optimistic as to think people won’t act so stupidly and self-destructive is, well, uh, misplaced.

Great post. Thank you.
Post Tue Feb 21, 2012 11:55 am
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2StepsFwd1StepBack
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quote:
Originally posted by coaster
The circumstances leading up to Johnny's bankruptcy can't be blamed on the advisor and the advice given, because, frankly, the consequences suffered assume a level of irresponsibility or stupidity on Johnny's part that's astounding, and it would have to be the former, because the latter was ruled out by the framework of this discussion, and the former leads full circle right back to my views about education's and society's responsibilities in producing a financially responsible member of society by encouraging, training, and developing an individual's ability and desire to ask "what if?" regardless of whatever advice may have been given, because that individual will want to, and will, figure it out for himself/herself. Smile


Bingo.

I don't think the Advisor has an obligation or responsibility to tailor his advice based on the Advisee's lifestyle or level of financial responsibility (or lack thereof). My immediate question that kept popping into my mind as I continued to read these responses was, "how does the Advisor determine what is responsible and irresponsible behavior among LJ's lifestyle to determine how to tailor his advice?"

Case in point... my Advisor believes I should be contributing to retirement rather than contributing to my daughter's college fund and son's special needs' trust. For reasons I won't rehash, I cannot contribute to, both, the retirement fund and college/trust funds right now. And for personal reasons and beliefs, I choose to contribute to the kids' funds rather than retirement at this time (hope to change that).

Does that make me irresponsible? Or, is it irresponsible if I spend the extra monthly cash from withholding to buy a shiny Shelby Mustang? What if that Mustang was for my daughter who got straight As all through high school while watching our for her little brother at school?

Should my Advisor withhold other pertinent and potentially helpful (or detrimental) advice because he's making a judgement call against my decisions? And if said Advisor is paid directly by me for his services, then is his decision to withhold bordering on unethical/unprofessional?

Apologies if I am oversimplifying this, as the OP seems more philosophical than practical. Just my $ .02.
Post Tue Feb 21, 2012 3:12 pm
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Great posts above from two different viewpoints well-expressed.

Very short response as time is pressing:

1) re the advisor: certain standards need to be upheld; these standards are expressed by regulation, policy, codes of conduct and ethics; and adherence by oversight and enforcement. If the advice given is in accord with all the above, the advisor cannot be held responsible for advice not taken, or advice taken but the consequences of said advice not taken. Bad or inappropriate advice willfully given, knowing that the consequences will harm the advisee cannot be tolerated. (and is not, when proper oversight and enforcement is followed).

2) re the advisee: must be held accountable for the consequences of his own actions; even actions taken due to bad or incomplete advice where the consequences of said actions could and should have been foreseen by simple common sense, simple fact-checking, cross-checking, and so forth. After all, part of individual responsibility is the decision made whether or not to take the advice given, and when that decision is made by default without consideration of whether or not it's a good decision, then the decision-maker can't be held blameless.

There's entirely too much finger-pointing and blame-shifting in our society, starting with the very top. And if it's seen to be the norm, then that's why people do stupid things, because it's accepted that they won't be responsible for suffering the consequences of their own actions.

~Tim~
Post Tue Feb 21, 2012 5:05 pm
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2StepsFwd1StepBack
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quote:
Originally posted by coaster
re the advisee: must be held accountable for the consequences of his own actions; even actions taken due to bad or incomplete advice where the consequences of said actions could and should have been foreseen by simple common sense, simple fact-checking, cross-checking, and so forth.


LOL! I, now, have my reason for when my Advisor hurtfully (but jokingly) questions what I'm doing lingering around on a financial advice discussion board?
Post Tue Feb 21, 2012 9:26 pm
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quote:
Originally posted by coaster
Great posts above from two different viewpoints well-expressed.

Very short response as time is pressing:

1) re the advisor: certain standards need to be upheld; these standards are expressed by regulation, policy, codes of conduct and ethics; and adherence by oversight and enforcement. If the advice given is in accord with all the above, the advisor cannot be held responsible for advice not taken, or advice taken but the consequences of said advice not taken. Bad or inappropriate advice willfully given, knowing that the consequences will harm the advisee cannot be tolerated. (and is not, when proper oversight and enforcement is followed).

2) re the advisee: must be held accountable for the consequences of his own actions; even actions taken due to bad or incomplete advice where the consequences of said actions could and should have been foreseen by simple common sense, simple fact-checking, cross-checking, and so forth. After all, part of individual responsibility is the decision made whether or not to take the advice given, and when that decision is made by default without consideration of whether or not it's a good decision, then the decision-maker can't be held blameless.

There's entirely too much finger-pointing and blame-shifting in our society, starting with the very top. And if it's seen to be the norm, then that's why people do stupid things, because it's accepted that they won't be responsible for suffering the consequences of their own actions.


Very nice!
Post Tue Feb 21, 2012 11:59 pm
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quote:
Originally posted by 2StepsFwd1StepBack
I don't think the Advisor has an obligation or responsibility to tailor his advice based on the Advisee's lifestyle or level of financial responsibility (or lack thereof). My immediate question that kept popping into my mind as I continued to read these responses was, "how does the Advisor determine what is responsible and irresponsible behavior among LJ's lifestyle to determine how to tailor his advice?"
What I'm looking for is at least an attempt by the advice giver to convey that he or she recognizes that there are both advantages and disadvantages to following much of the advice that is given.

A good choice does not always entail a perfect outcome. Often (I would think), people weigh the pros and cons of a decision and when the advantages outweigh the disadvantages of each option on the table, people tend to refer to one of them as the best alternative, not because it's a perfect outcome with no disadvantages but rather because in their assessment, the pros sufficiently outweigh the cons.

When I hear it said that certain decisions are stupid and others are the better choices, I'm not so sure I'm all that inclined to agree when the disadvantages of making a good decision is held back. What I expect (misplaced expectations?, lol) is for the advice giver to acknowledge that there are at least some negative repercussions to what is otherwise regarded as superior advice.

At any rate, I’ve enjoyed the discussion.
Post Wed Feb 22, 2012 12:13 am
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coaster
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quote:
Originally posted by 2StepsFwd1StepBack
I don't think the Advisor has an obligation or responsibility to tailor his advice based on the Advisee's lifestyle or level of financial responsibility (or lack thereof).

Actually, a good advisor WILL do this, at least to the degree that such details are shared with the advisor. And if the advisor is making specific recommendations and/or is empowered with the legal authority ("power of attorney") to manage the client's money, he is REQUIRED by regulation and by standards of practices and codes of conduct to do so. The operative words are "determining suitability" of his advice and his "fiduciary responsibility" (when he has hands-on with the client's money).

Of course, the advisor can tailor the advice (suitability) only insofar as the client provides the information necessary to do so. If Johnny didn't tell his advisor he has no control over the cash in his pocket, then the advisor cannot make that assumption. Making assumptions about suitability can get an advisor in some pretty hot water.

~Tim~
Post Wed Feb 22, 2012 12:23 am
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quote:
Originally posted by fast
When I hear it said that certain decisions are stupid and others are the better choices,

The identical course of action may be stupid for one person and wise for another. In the end, it's the person who's going to suffer the consequences, or reap the reward, that has to make that decision.

"Just give me the facts; ALL the facts, please; and what the probabilities are for potential risks and rewards; then let me make up my own mind." Smile

~Tim~
Post Wed Feb 22, 2012 12:29 am
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quote:
Originally posted by coaster
"Just give me the facts; ALL the facts, please; and what the probabilities are for potential risks and rewards; then let me make up my own mind." Smile
We're definately on the same page now.
Post Wed Feb 22, 2012 12:39 am
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You talk about society being the fundamental driver behind the comments made about financial advice that comment just might include me, as I by virtue of originating this thread am talking about advice givers.
Post Fri Apr 13, 2012 6:43 pm
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