Tag Archives: ethics

A Fiduciary’s Reading List

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I’ve completed William Bernstein’s recommended reading from his eBook, If You Can.

The reading humbled me. With a 1st Class degree in Econ / Finance, and 20 years experience in international investing, I was left feeling intellectually arrogant and ignorant. Each of these books challenged my beliefs while explaining financial history.

I’d recommend making these books compulsory reading for your advisers and key family members.

Good people can be found in the field of finance. I appreciate the significant time that each of the authors spent to educate willing readers.

The Millionaire Next Door – introduces the key concepts of wealth, saving, investment and taxes

Your Money & Your Brain – a solid summary of the latest on behavioral psychology as it relates to finance and investment – why I will always fool myself

The Great Depression: A Diary – an inside look at what it is like for a conservative, professional family to live through a depression – 2008-2010 was easy compared to the 1930s – could your family survive on minimal income for multiple years?

All About Asset Allocation – the early chapters were the most useful – simple explanations of the role that volatility plays within a portfolio – reading this book, you’ll be tempted to seek the perfect portfolio mix – my decision has been to keep it simple

Common Sense About Mutual Funds – a wealth of information – Bogle picks apart the industry by making his case for simple and low-cost investing – the book makes one wonder how brokers and financial advisers can sleep at night – readers will learn about the industry structure that silently fleeces its customers

Side Note: if you worked in finance from 1980 to 2000 be sure to adjust your brilliance for volatility and leverage using Bogle’s updated charts. We had one heck of a tailwind. Humbling!

How A Second Grader Beats Wall Street – don’t be fooled by the child-like title – this book will save your family tens of thousands of dollars in fees and taxes

Devil Take the Hindmost – a history of financial speculation – hedge funds in the 1860s & derivatives in the 1600s (!) – as Taleb says, we’re never going to get rid of greed, the challenge is to build the system so the greedy don’t inflict suffering on the good

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To Bernstein’s list, I’ll add Estate & Trust Administration for Dummies – a good primer to get you thinking outside of your own self interest.

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If you are in an advisory, or trustee, relationship then tick off one book per meeting with your professional team.

Read a book, take notes and discuss how the book impacts your family (or your firm).

Challenge yourself with exposure to the best ideas available.

Studying new approaches can be painful but we all benefit from a bit of cognitive dissonance.

How I Met Your Mother

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Gordo and MonicaWhen I lived in Asia, I made some money, had my best friend die and blew up my marriage.

A wise friend observed that it was fortunate that the marriage exploded because I was better off waiting until I was able to offer something to a relationship. My buddy, who would spend the next decade dealing with her breast cancer, captured an essential aspect of successful relationships – that they are best avoided until you are prepared to continually offer yourself.

I look back at my writing from that time and smile at how hostile I was to relationships. Ten weeks before I met my wife, I rode across the United States with a Swedish buddy. He gave comfort that, indeed, there were “at least three women in the world” for me. When I asked, “why three and not one?” He smiled and told me, “the world’s a big place, Gordo.”

Squash Court

[This is the squash court where I met your mother]

In the middle of 2004, I conquered my fears and walked into a room of (mostly) female, triathletes. They were training under the instruction of a six-time world champion, Dave Scott. Dave personifies the old coaching adage “challenge your men and love your ladies.” He didn’t cut me any slack!

It was a complicated situation as my wife-to-be was going out with my landlord’s brother and neither of us were aware that we should be together. I played a long game, got her out of the country and we were engaged before she returned to Boulder.

Nelson, NZ in 2005

[Here’s your mother as a young woman in New Zealand. She was working as my extra-special soigneur at a stage race.]

We were lucky. We grew into each other.

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The journey that led to a wonderful life partner began years before I met Monica. I started by cultivating independent self-love, which sounds like something you’d hear in yoga class.

In the language of business…

To do a good deal, you have to be willing to do no deal, a fundamental component of success.

Divorce caused me enough pain to make me hostile to any form of intimacy. First a childhood divorce, then my own as an adult. There were deep feelings of failure associated with marriage. I had not learned how to strengthen a marriage and was preoccupied with the illusion of failure.

After my divorce, I made myself a better person. This was not my goal. Becoming a better person happened because I stopped living the values of other people – back then I was misled by money and assets. Later I was misled by victory and vanity. At the end, I hope to end up with kindness, good humor and service!

My introversion, and pride, fed a desire to prove that I could be happy alone. Truth be told, I was never alone – I wrote frequently and had two very close friendships. One of these was with Scott Molina and he joked that I had ’embarked on the longest dry streak known to man.’ Scott’s observation still makes me smile!

To make myself relationship worthy, I needed to create a life where I was happy without an intimate relationship. In order to have something to give, I needed to develop a source of energy outside of the relationship. I found my source in athletics and nature.

The great spiritual traditions write about love being the source. I have a long way to go there. My love for my children is a sign explaining that everything I need is within myself.

As an introvert, the teaching that I’m my own source feels natural because I’m happy when I’m alone. However, I need to be careful that I’m not alone too much. First, because there is a deep human need for intimacy. Second, because a life with meaning requires us to do good work in the world.

After five years of working on myself, I met my wife. In Monica, I discovered that I enjoyed spending time with her more than I enjoyed being alone. I’m not sure if that will make sense to an extroverted reader, who might find solitude draining. However, for the sociopathic hermit in me, it was a revelation.

To create an intention for success, I tell my wife, frequently:

  • There’s no way I am going to improve my situation through any pathway other than our marriage.
  • I’m grateful for all you do – family life is a challenge but I know that family life alone would be far, far more challenging.
  • While I accept that it only takes one person to crater a relationship, I will never speak about failure on my side. If we hit hard times then I’ll stay close and wait for you to come to your senses.
  • I hold the trust between us as sacred.

All thoughts to the contrary, of what I state above, are a sign of temporary insanity!

Ironman New Zealand 2004

[As a couple, Ironman New Zealand 2004 was our best ever. Your mother swam 2.4 miles in 46 minutes and finished 2nd overall. Living in love makes you powerful!]

Today is the 10th anniversary of the day I met your mother and I’m so grateful.

Love you, Babe!

The Trap Of Fixing

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Camping With My SweetieSome say hate is a sign that you’re having an impact.

I’m not sure.

I think it’s more accurate to say that hate is a reaction to what I’m sending out. It’s an opportunity to pause, consider and learn.

When I’m focused on helping people, my ratio of positive to negative interactions is 500:1.

I find being told to change extremely painful. It’s like I let the World down, which is a major trigger for me.

The best antidote that I’ve found for dealing with my own negative feelings is to pause, not react, and ask myself, I’ll be happy when…

  • all dopers are caught
  • all frauds are punished
  • you change, rather than me
  • you. stop. that. right. now.
  • you close your sport, business, site, magazine because it bothers me
  • everyone, like me, has equal justice, from bigots like you
  • you break those friendships off

Are you sure that you’ll be happy if they change?

I won’t be happy when you change. I’ll pat myself on the back and move on to the next target. It is a path that’s guaranteed to make ME miserable and strengthen whomever is happens to be “wrong.”

My reality is that I will either be happy now, or not at all.

I share this because the 500:1 ratio is a compelling case that we can have a much greater impact by helping, rather than correcting, each other.

The positive interactions are what make us happy.

Break the chain.

What I Learned This Year

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My daughter and I have been dancing together all year. It seems we are on a six-week cycle that ranges from love to despair and back to love. During a week where I was heavy with anger and misery, I reached out to friends. Their best advice:

  • Love your children for who they are.
  • More than being right, or justified, remember that you must preserve the relationship.

Remember that you just might want your (adult) children to repay your kindness down the road. With three kids, I figure one will come through for us. I have a lot of advantages to help make that happen.

With that in mind… Being a great student, a successful investor, an elite athlete… all of these have NOTHING to do with being an effective parent. To live happily alongside young children requires new skills and different approaches.

What’s my source of education and new ideas? My best advice for you is to read – The Happiest Toddler on the Block by Karp. The book took me 90 minutes to read and removed half the meltdowns in my life. My son (2.5 years) and I have a fantastic relationship due to the application of Dr. Karp’s advice.

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There is no denying the segments of deep misery that I have experienced this year. However, when I step outside my life, I can see how easy I have it. However, it’s near impossible to “will” a change in attitude. To change, most people need a crisis.

To help myself shift my attitude I’ve taken the lead with emotionally difficult situations. To date, I’ve had more success outside my house. However, I’m going to stick with my efforts through 2014. My misery could be a catalyst to let go of my desire to force change on my kids. It all comes back to being happy with the way things are (and if I can’t be happy then at least accept it).

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A wealthy friend of mine has to deal with a lot of people that have massive egos. Some of these folks are extremely difficult to handle. I asked him for advice on dealing with fraud. His secret is to be grateful that he doesn’t have to be like others. By acknowledging his freedom to choose, he decides to be a good guy (and that makes him grateful). So I’m working on a good-guy at-home sabbatical for 2014.

On the gratitude side, working with the dying is effective. Some of the folks I work with would love the opportunity to swap into my “problems.”

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Be a hero rather than a bystander. Remember that being part of the solution doesn’t require owning, or solving, the problem. In serious situations, it takes surprisingly little to make a difference.

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Resist the urge to judge other people’s involvement with their families. There is an air of superiority between parents that spend a lot of time with their kids. We wear our involvement like a hair shirt. I need to remember that, often, less involvement is better for everyone. When I over-do-it (even by a couple hours per week), I set the kids off and make everyone miserable.

Too much parenting and I become the problem, rather than part of the solution.

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I have a negative pattern of responding to noise with anger. Now that I can see it – I can work to respond to noise with calmness.

I will share a tactic…

In each of our lives we have moments where we transcend ourselves. For me, it might be the feeling of my son resting his head against me and giggling. A feeling of peaceful openness where the two of us are relaxed and together. If I am aware then these moments are easy to remember. I breathe into those moments and save them for later. When I feel the seed of anger, say tightness, I use the same breath-feeling to open the resistance that creates my anger. Sometimes it works, sometimes it doesn’t. Any reduction in suffering is a win.

By the way, the above is a technique that I used a lot in endurance training. I would breathe into my training “highs”, attach a word to the feeling, and save for later. I’d use my power words when racing became difficult.

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I will be 45 at the end of the year. A lesson that stands out with achievement and success…

The years where I focused on self-improvement, and made progress, resonate more strongly than the years where I focused on beating others.

Excellence defined relative to peers brings resentment, especially when value systems aren’t shared.

In all areas, let go of the constant desire to be right.

Vanity And Victory

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Kids have an amazing capacity to reflect and absorb the world around them.

I can see this ability, most clearly, in how they pick up the phobias and idiosyncrasies my spouse. With regard to my own traits, I see my strengths reflecting in the kids. By the way, my wife sees the same thing – just reversed.

There is a great scene in the movie, Parenthood, where Steve Martin exclaims, “I just can’t figure out where he gets this obsessive behavior from!” I think about that quote a lot and smile at myself. I own obsession in our household.

As an elite athlete, I valued physical power, domination and winning. You can see these characteristics expressed in other fields (finance, business, perhaps the military). These values have strengths and weaknesses. For a young person, they help you get a tremendous amount of work done (good) but they can leave you blind to the feelings of others (less good). Lacking empathy isn’t always a bad thing, say if you’re combat infantry. However, when that value flows up the organization, it can lead to harassment and corruption.

Over the last two years, I saw the risk of maintaining my values of vanity and victory. I became aware of corruption and scandal throughout the lives of my peers. We always tell ourselves that we’re different but the evidence was so overwhelming that I had to admit that I was fooling myself. Elite performance is a high risk field for ethical strength.

Most athletes sort the world into fast/slow and fit/fat. This differs from business, expressed as rich/poor and beautiful/ugly.

I get resistance when I point these splits out of people (they are obvious in my own thinking). If you can’t see them then listen to other people talk about individuals with mixed characteristics. For example, fast/fat and slow/fit create confusion in athletic populations.

Back to the start of this piece – my children learn little from what I say but they learn most everything from what I do. Bringing them up in a household that prizes winning, and looking good, above all else might not be the best way to play it. They’re going to get plenty of that in the local Boulder community.

Widening the net, consider an individual that achieved the difficult task of creating a lot of wealth. If your #1 value (expressed in peer admiration) is wealth then you are setting up a conflict with your kids, who crave your admiration. If they reject you then they might be protecting their self-image from realizing that they can never be successful on the terms you prize. Look outside your family for examples, they are easy to see.

Millionaire, Champion, CEO… these are difficult to achieve – you deserve respect for the work required to achieve.

  • Achievement become identity
  • Identity becomes values
  • Values become skewed
  1. Remember that the value lies in the work, not the achievement
  2. Goodness requires neither beauty nor money
  3. Listen to how your friends speak about others
  4. Consider if you may need to adjust your friends

As always, I’m talking to myself, not you.

When You’ve Made Your Money

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By the time I was 32 years old, I had created a life where I had the option of working parttime. For the most part, I got that opportunity “right” and enjoyed my freedom.

My errors came from from the thought (perhaps the lie) that spending yields happiness. That belief, shared by most my peers, pulled me back into fulltime employment twice over the last decade.

The first time I was pulled back, it was to help a friend start a business. There was huge equity upside and I loved the work. It was a good decision but I ended up over-extended financially. Thankfully, I started selling down in 2005 and, in the Great Recession of 2008, “only” lost 2/3rds of my net worth.

The scale of the losses was equal to what wiped out my grandfather’s generation. In the four generations of my family tree (that end with me), we’ve lost enough money for the entire family to never have to work a day in their lives. The bulk of my current job description (father, teacher, administrator, spouse, brother, uncle, trustee) is trying to reduce the frequency, and consequences, of these bad decisions.

When I took my big financial hit, my cost of living (2008) was 5x higher than what I spent in my first year of “freedom” post-college (2001).

Due to the bankruptcy of the business I’d been advising, I was under a tremendous amount of stress. Reflexively, I chose to cut expenses and replace income. My family’s 2009 expenditure was half of 2008, but remained 2.5x higher than what I spent in 2001. I focused on my back-up career of coaching (always have Plan B!) and managed to cover 50% of what I was spending.

At that point, 2010, I didn’t know what to do. Inside my personal business plan, I have a heuristic “if in doubt then wait.” So I repeated the year, with a couple exceptions, Axel (2011) and Bella (2012).

Gradually, across 2011 and 2012, I realized that preserving the status quo (large house, dad working to pay bills that don’t make him happy) was insane. Despite being complete insanity, I was following a path that had universal support in my peer group. As my kids popped up, I noticed that I was getting less and less fun to be around AND I was actively working to create a life outside my house.

The family readings that I shared, and my family history, show that it’s almost certain that we will wipe ourselves out (perhaps more than once) in the next seventy-five years.

What should you know about your money?

  • Most of any financial legacy will be gone a couple decades after my death, or spent by people I never knew
  • The greatest pressure I experience is preserving wealth that I’m unlikely to spend
  • I know I can live in peace on a fraction of my current spending

What do I truly need? Easy to answer day-to-day: exercise, love, service and health.

For the long-term, I like to have a mission. Why not make the people I live with part of my mission? Then I’m surrounded by meaning, and success. If that’s the case then what does my family truly need?

Empathy – it’s easy to find people to do stuff. It’s a lot tougher to find people to listen and care.

Learn To Teach Ourselves – my writing is about sharing how I teach myself. Tools that I want to pass to my kids: write down insights and blindspots, make errors visible, replace habits that hold us back and share stories of what you’d like to become.

Cope With Loss – More by accident than design, I’ve been on a self-guided education of the major faith traditions, neuroscience and behavioral psychology. This has led me to believe that loss is an opportunity to learn by experience. Until life deals us a major setback, we will not understand impermanence and the nature of existence. Create a daily practice that let lets you process, release and recharge from the challenges we all face. Deal with loss by continuing the good that you’ve learned.

My kids weren’t around for for the first 40 years of my life. Common sense means I won’t be here for the last 40 years of their lives.

What’s your legacy?

Good memories and a skill set that let’s the student surpass the teacher.

Mentors and Peers

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How can I stack the deck in favor of being a good guy?

First, I try as much as possible to get positive influences to visit me.

Second, I’m willing to travel to hang out with people that are what I’d like to become. Back when I was an elite athlete, this drove my travel schedule. These days I travel less but it remains a big chunk of my year.

My family allocates 14 weeks per annum for my travel.

  • 4 weeks of that is my wife and me
  • 2 weeks is used for continuing education
  • 8 weeks is for my own uses – these days split between non-Boulder family visits and personal trips, mainly to ride.

My daughter joins me for two weeks of the above and we do another two weeks worth of in-state travel together.

Pulling it together, I have a job description that gives me 16 weeks per annum of variation from my normal routine.

Before my daughter was 2 years old, this allocation would roll between 30 and 40 weeks per annum. As I’ve simplified my life, and released my expectations for triathlon greatness, I feel more free with less travel.

In considering a trip, I ask myself three questions…

  1. Are the people that I will see infused with goodness?
  2. How do the people make me feel?
  3. If I turned out like these folks, would I be ok with it?

There are plenty of people, and companies, who pass the test. Make a note when you meet these people and keep them in your life. 

While its tempting to vacation in, say, Vegas, we are more likely to generate success by keeping the goodness in our lives. For the key relationships (bosses, mentors, clients, peers) visiting on their home ground will broaden your understanding, and keep you humble with your capacity to predict. The on-the-ground situation is nearly always different than I imagine.

The focus on “the good” is an ethical litmus test. I’ve caught myself valuing winning over kindness, an occupational hazard if you’ve spent time in a field (sport) that values relative performance. I’m also prone to errors of judgement due to wealth and beauty.

Choose Wisely.

Difficult Conversations

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Over the last year, I have been travelling to learn about my friends’ lives. The trips are short, and we have the opportunity to talk a lot. By keeping the trip short, and going to my pals, the quality of the conversation is high and the inconvenience to my family is small. The trips have a large payoff for me:

  • Gratitude for the life I have
  • Learn what’s good about their lives – try to figure out the payoff from living like them
  • Make sure I see friends that I want to keep in my life
  • Learn about an aspect of their lives where they have different knowledge than me (teenagers, aging, the transition to adulthood, healthcare, performance psychology, grief & loss).
  • Do something random to generate new opportunities.

One of my favorite discussion topics is managing difficult conversations. For example, a challenging situation for doctors is telling the mirror image of themselves about the arrival of their greatest medical fear – cancer or terminal illness.

I ask questions about.. How to cope? How to be effective? What is best practice?

These skills are useful at work and are essential to create an exceptional family web. I’ll share what I’ve learned so far.

Before a difficult conversation, pause and remember:

  • This situation is not about me
  • I am part of the solution
  • Be cautious
  • Understand that I will make incorrect assumptions about everything around me

The points above get me in a relaxed frame of mind, especially when combined with my Big Meeting Protocol. The mental preparation works best when combined with an on-going process of self-reflection (that I like to do while cycling). You’ll be surprised that you can mute your emotional triggers by awareness that they exist.

Understand your hot bottons – examples might be: not caring, not doing enough, letting someone down, past mistakes where I’ve yet to ask for forgiveness, or not addressing areas in my own life where I need to make change.

Know your desired outcome – examples might be: clear communication, exit a relationship, create consensus, make better decisions.

Follow up in writing – if the conversation triggers fear, or anger, in the other person they are unlikely to remember the conversation. Even if you’re hearing each other, everyone hears a different conversation. Certainly, everyone remembers a different conversation.

Focus on helping the other person – I’m more likely to get my desired outcome if I help the other person achieve their own goals. A doctor might ask a terminally ill patient, “is there an up-coming event that we can focus on getting you to attend?” Alternatively, a family member might have concerns about public perception, confidentiality or independence.

Remembering my tendency to make incorrect assumptions – I like to gather information from the other party so I can better serve their needs. Often, a person’s needs are as straightforward as being listened to, respected and valued.

Finally, I remember that my mission isn’t to change others…

  • …because I don’t know best
  • …because I have my hands full with myself
  • …because my life is my source

Good For Him?

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A successful family web requires constant forgiveness, of our own errors as well as the rest of the family.

One of the great things about young children (and my wife) is a lack of memory about my mistakes. I get a fresh start each morning. I try to offer the same to them.

Irrational loyalty in a spouse creates a paradox. There are times when I overreact to others getting the benefit of my wife’s gift to our family. A conversation that we’ve had, more than once, goes like this:

M – I think Bruce might be sleeping with Sheila.

G – You sure?

M – Not really.

G – That’s messed up, what about the kids?

M – Well, he’s not happy. Good for him to try to find happiness.

G – Good for him?!?

At that point, I get very very quiet. I do that because I know…

My wife’s already perfect. I really mean it. Making her more like me, convincing her to see the world like I do, is highly unlikely to improve her, or our marriage. Society is always telling women that they would be better if they were something else. My gift for her, and my daughters, is believing that they are perfect as they are. There is ancient wisdom with this insight, women flourish in this environment.

My marriage benefits from my spouse’s irrational loyalty. A price I “pay” for this gift is her tolerance of the errors of people that are close to us. I should chill out, it’s a bargain and I get most the benefit.

However, I’m not irrationally loyal and my love is conditional. It takes a while to grind me down but I’m an old testament guy. No exceptions, other than my kids have a waiver until they are 18.

As a result, when fraud sets off an ethical trigger, my automatic brain floods my mind with rage and fury. I’m not a nice man when crossed and I’ll share a few thoughts:

Good for him? Why don’t I get myself some and see if there’s a different reaction.

Good for him? You have no idea how often I turn away from a path of infidelity.

Good for him? That happens in our marriage and I’m gone!

Good for him? I always wondered about their sporting ethics, now I know.

Good for him? What about those children?

Of course, my internal dialogue is an over-reaction. Having had my share of vomit moments, I am being triggered by an event in my past.

However, we should remember that when we fail to stand up for what’s right, we might be attracting what’s wrong.

…and I’m not writing about the Law of Attraction. I’m writing about our ability to extinguish ethical dilemmas before a decision needs to be made.

Many of my best decisions have been placing myself in a peer group where I never had to choose.

I have learned to protect myself from my own misjudgment.

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Names and conversations are compilations. If you think I’m writing about you then you’re mistaken. I’m writing about me.

Keeping It Civil

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Woven through Harvard’s Justice Course is Professor Sandel’s view on the best way to handle civil discourse. We can use Sandel’s tips to make ourselves more effective and remain clear headed in potential conflict situations. I’ve been trying to make his tips a habit for how I deal with my kids.

The first thing that I noticed was, aside from ripping a supreme court justice by name, Sandel makes his arguments using the words of others. He’s not seeking credit for a point of view. This gives him space to change his mind in light of new information. Across the course, one senses his opinion but, on a wide range of issues, we never really know.

Being able to change direction is valuable because we suffer from Consistency Bias – a desire to stay-the-course based on previously held positions. There’s also tremendous social pressure to avoid change. Collectively, we find something comforting about a refusal to change.

Next Sandel, acknowledges that there are some issues (abortion, gun control, same-sex marriage) that are unlikely to resolve to everyone’s satisfaction. With these issues, especially, Sandel advises that we search for an agreement that enables people to retain their deeply held convictions, while respecting individual rights and freedoms. 

A question to consider: “Can I make my point in a way that enables you to retain your existing position?” 

Consider doping: I can write that it is a question of honor; or I can list cheaters while complaining that they broke the rules. The first method is an appeal to a universal sense of justice. The second method is arguing my self-interest. Between the two methods, it is clear which argument is more persuasive, especially if the agreement of the cheaters is necessary to implement change.

Making a point as a general argument of virtue is more powerful than getting bogged down in accusations against individuals. This method leaves a wider path to forgiveness, resolution and reconciliation. The toughest ethical debates, and decisions, that we make happen with friends, lovers and family. Leaving the door open (both ways) is in everyone’s long-term interest.

I also noticed that Sandel would reach consensus on a general principle, then shift laterally to the contentious issue and see if existing views are consistent with the general principle.

Then Discuss.

Then Reconsider.

Then Repeat. 

This classical method of debate has nearly disappeared from our society. Most of us, lack role models to teach us how to implement it. At University, I learned debate technique from CNN’s Crossfire – if the guys weren’t arguing over each other then we thought it was boring! Needless to say, my technique failed with my first real-world encounter with senior management.

Other questions that I have been asking myself:

Of all the above, make points generally, has been the most useful. It even works with upset four-year olds!