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Financial Planning Insights

Don’t try to avoid all emotions. Lean into the right ones.

By Joe Maier and Bob Schneider | Johnson Financial Group

4 minute read time

You have probably seen articles in the financial press recently about the danger of making “emotional” decisions during the current economic crisis. This theme crops up anytime we have a period of economic uncertainty, as writers weigh in on how investors can avoid making decisions that run contrary to their long-term best interests.

While I fully agree this theme is a critical one, I respectfully disagree with the conventional view that eliminating emotion in favor of “hard logic” is the right way to approach decision-making during times of uncertainty. Here’s why…and a better approach.

Fear is the enemy of wise decision-making

Our brains are wired to overstate and overemphasize fear compared to other emotions. When Franklin Roosevelt proclaimed during the Great Depression that “the only thing we have to fear is fear itself,” he was pointing toward a neurological truth born out in research over the coming decades.

In behavioral economics parlance, fear impacts financial decision-making through “loss aversion,” “regret aversion” and “herd mentality,” each of which I explored in a prior post.

Taken together, these three impacts can lead us to follow the crowd, especially during times of financial, economic and market uncertainty and volatility. That typically means selling as others are selling and buying when others are buying...which amounts to “buying high and selling low.” That’s something no rational wealth maximizer would ever do.

Why logic alone doesn’t work

Despite the obvious fact that “buying high and selling low” is suboptimal, it’s difficult to do otherwise when the “fear centers” in our brains are screaming at us to make dumb financial decisions.

The portion of our brain responsible for decision-making is the limbic brain. The “problem” with the limbic brain is that it understands neither words nor numbers. It is not logical. Rather, the limbic brain is solely, completely, exclusively and indelibly emotional.

So, our brains simply do not allow us to follow the experts’ conventional advice to shut down emotion and turn on logic, despite reams of statistical evidence showing why staying the course, or even acting contrarian to the market, is what a rational wealth maximizer would do during times of market stress.

The right emotions

Even if our brains worked differently, I would still suggest ignoring experts’ advice to shut down emotions in favor of logic.

After all, why do we accumulate wealth? Is it a mathematical exercise? Is it as simple as “the more the better”?

That is not my experience in working with clients. They build wealth to use it. They use it to maintain a standard of living. They use it to purchase goods, services and experiences. They use it to take care of people and causes they believe in. They use it for needs, wants and wishes. They use it for independence, legacy and impact. They use it to make themselves happy.

That’s why I suggest leaning into happiness as the “right” way to deal with emotions during times of great uncertainty. Now more than ever we should go back and focus on what makes us happy—and how our wealth is designed to maximize that happiness.

As part of this process, we should rerun our financial plans. In doing so, we’ll see mathematically that our plans point toward a lesser ability to meet needs, wants and wishes when we give into fear. We’ll see that “buying high and selling low” will minimize our happiness and maximize our misery.

In this way, logic definitely does come into the process. But not on its own. When logic is applied in the service of maximizing happiness, we tend to be far more comfortable sticking with our plan and adapting it in intelligent ways. Smart adaptations might include, for example, delaying wants and wishes and using lines of credit, rather than selling investments, to raise cash to pay for needs.

The key insight here is that emotions are, neurologically speaking, at the core of all our decisions. Therefore, it’s much more successful to embrace emotions by focusing on the right ones. When that happens, you can much more confidently avoid fear-based behaviors that may be soothing in the moment but will lead to misery later on.

Remember your “why” when it comes to wealth. Doing so will help you make decisions that carry the best chance of achieving and maintaining happiness. And is that not the point?

by Joe Maier

Joe has extensive experience helping high‐net worth individuals, family offices, business owners and corporate executives meet their wealth and legacy goals. His areas of specific interest and skill include business succession planning, financial and estate planning, and wealth transfer strategies.


by Bob Schneider

Bob Schneider specializes in providing clients with the educational information and tools necessary to make informed decisions regarding their financial planning goals. He uses his financial planning experience to help individuals and families plan for and enjoy their retirement years.


Johnson Financial Group is a privately-held financial services company and marketing name for its subsidiaries Johnson Bank, Johnson Wealth Inc., and Johnson Insurance Services, LLC.

Johnson Financial Group and its advisors do not provide tax advice. You should review your particular circumstances with your independent tax advisor.