Executive Summary
Some decisions are largely matters of data and analysis. Yet more often, that analysis informs a decision with trade-offs, such as funding retirement or education. Given that we all work with limited resources, financial data is crucial to inform how each dollar may function in these circumstances… yet the data does not produce the definitive right answer. Which raises questions about the 'other' type of data: feelings.
In this 196th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss what place feelings have as a point of information, data, and analysis to help reveal what 'truly' matters. After all, the reality is that gut feelings, physical sensations, or a lingering sense that something is off often represent subconscious recognition of factors that have not yet been fully articulated. Yet a feeling, on its own, is not the end of the journey. Rather, it is the beginning of an excuse to become curious about what is causing those feelings that may have been overlooked. (For example, if a business opportunity looks good on paper, but the advisor's 'gut' isn't quite bought in, then that signals an invitation for self-examination.)
The good news is that asking questions about what their 'gut' says doesn't have to be complex. Questions as simple as, "What do you think of that option? How does feel?" with a few follow-up questions is often enough to get the conversation started without feeling 'over the top'. This is especially important as a client's goals may not reflect what they 'really' want subconsciously, so the advisor may be able to find and follow the thread of intuition with the client.
On the other hand, it's also important to remember that gut feelings come from everywhere, such as exhaustion, intimidation, and even socialization about what a person 'should' want, so a feeling of hesitation may not be related to the decision itself. Yet even these feelings are data in their own right; they're just signals related to different adjustments that may be needed!
Ultimately, the key point is that drawing the deeper information within feelings often takes considerable time and effort – but it is nonetheless worthwhile. Aligning gut feelings with analytical data is often the key to making decisions that are both fulfilling and sustainable in the long-term. Often, the key to this information comes down to contemplation, time, and well-placed questions… but with practice, this becomes easier both for the advisor (to ask) and the client (to answer), creating positive momentum in their decision-making process!
Authors:
***Editor's Note: Can't get enough of Kitces & Carl? Neither can we, which is why we've released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and YouTube Music.
Show Notes
Kitces & Carl Transcript
Michael: Well, greetings, Carl.
Carl: Michael Kitces, so fun to talk to you today.
Michael: I'm excited to talk to you today.
Carl: Let me ask you something. How are you feeling?
Michael: How am I feeling?
Carl: Yeah.
Michael: Honestly, I'm feeling a little bit tired. As of our recording, we're still end of spring, beginning of summer, which for me is like the tail end of spring conference season, when we have like a whole slew of industry events one week after another after another. And so I've been road warrior-ing for the past five weeks or so, and still have two left before I finally get to hang out at home and not go to an airport for a month, which I'm really excited about. So I'm feeling a little bit drained right now with all the stuff going on. Overall work-life balance is actually pretty good on the whole, but busy season is still busy. It makes the light season more appreciated. Busy season is still busy. It's a little tiring.
Carl: I'm actually quite curious now. When you feel tired, what does that actually feel like? Where in your body? What happens? Describe feeling tired.
Michael: Feeling tired, for me, it starts with my brain just doesn't want to think anymore. I would like to sit down and be able to do something very mindless that I do not need to exert any like particular brain energy towards. Maybe it's playing a light video game. It's watching a show with the kids that does not require me to think terribly much. I just need to do something where I can mostly turn the brain off because the brain's just tired.
Carl: Yeah. Well, it's fun. Thanks for allowing me to ask because what I want to talk about, I think...
Michael: Where are we going with this, Carl?
Analyzing Gut Feelings When Making Big (Business Or Financial) Decisions [02:11]
Carl: I just had this really interesting experience, and it goes along with your dollar symbol up there that you can just see the bottom of. I've been as part of the book tour traveling around asking people about the first feeling that comes up when they see a dollar sign. And it's led to all these discussions, and at FPA events particularly, it's always fun. And by the way, financial planners are not any better or worse than this. It's actually all of us humans. It's just a very concentrated sample size of sometimes it's really hard for us to figure out what it means to feel something. And that's led me down this rabbit hole around I've noticed I've got other people in my life that I'll say like, "How did you make that really big important decision? How did you decide between that and that?" And it was big, like, "Should I take that job? Should I marry that person? Should I move to this city?" Big decisions. And I keep hearing this thing of like, "God, I just felt my way through it," or it felt right. And then I would dig a little bit more and realize there was a bunch of analysis that went on first. A whole bunch, like in my presentations now, we sort of make fun of you a little bit by turning you into a verb. So people have Kitcesed it to death.
Michael: Okay. Oh, that's the verb. You "Kitces something to death" with clearly deep high-quality analysis.
Carl: That's exactly right, deep high-quality analysis. That's what Kitces means. So you've Kitcesed it. At the end of that, you're still sort of left with a little pile of maybe you've narrowed it down to two, but the two are, "Take the job or don't. Marry the person or don't. Move to the city or don't." Those are big decisions. And you're still not sure because there's this weird thing in life called uncertainty. Right? Like there's no way to know. And when we get to that spot in that little moment, after all the analysis is done, we often...and we don't know that we're doing this and we don't acknowledge it and we give it short shrift. We downplay it, but we often feel our way into it. So I've been thinking about this, is there a world in which feelings are data. I got a bunch of...
Michael: You're trying to make feelings into data for me. I appreciate it.
Carl: I've got a bunch of claims to try and convince you. And I'm not sure I'm right, but I want to have the argument because it's so fun. An argument meaning let's talk about it. What comes up as soon as I... That whole thing of I've Kitcesed it to death. I got this last thing. And then you say, "Oh, gut feel, or it felt right. Or I felt my way through it. Or I just knew." How about that? "I just knew."
Michael: Yeah. So this is actually stirring up some, I guess, resonance to me almost very literally on the feelings are data part. But I come to it from, I don't know, the opposite end of the gut feeling my way to the conclusion. So when I reflect back on a number of big, probably for me, business and career decisions, I've done a bunch of things and I have to reinvent myself every three years out of sheer compulsion. So I've had a number of different business crossroads over the years of, you know, do this or pursue that, or merge here or exit there, all the different things that crop up. And often when I'm going through one of those, I'll Kitces it, because that's clearly what I do.
Carl: If you don't, who would?
Michael: Yeah. But usually I'll get to a preliminary decision and say, "Okay, now let me sit with this for..." usually like a day.
Carl: Sit with it.
Michael: It's some version of I'm trying to give myself space to sleep on it because what I found and I wish I could get back to whenever this happened the first time. And I don't know where it originated. I'd love to have the great story. And I can't summit it on the spot. But here's what I found. I do my first round of evaluating the decision, right? You analyze it, you make your pros and cons columns, whatever your thing is. And then I take it and I'll sit on it for...sleep on it for a night. And when I wake up in the morning and I reflect on it, one of two things happens. I wake up in the morning, reflect on it. I'm like, "I am feeling really good about this. It's a go." Or I wake up and there's some proverbial or actual knot in my stomach, something feels wrong.
And so what's evolved for me over the years, it used to just be some version of, "All right, well, it feels wrong. Maybe that means it's not right. And I'm supposed to trust my gut. And so I'm going to change my mind or whatever the thing is. But now, I'm trying to articulate my actual big decision process for making big decisions. If I wake up the next morning and I've got some version of that negative feeling, I literally go hunt at it like a data point, because I think this is where I liked your feelings are data. I start hunting for it like a data point. What's bothering me or holding me back that this isn't actually feeling good. My gut is surfacing some additional knowledge or intuition or data point that I didn't realize I needed to be factoring in the way that I have.
And I'm trying to think over the years. There was an opportunity that would have required me to do massive amounts of travel, even more than I've done historically. And it was a really cool offer, an opportunity. And I woke up the next morning and it felt really bad in the pit of my stomach. And in trying to get to what it was, what I realized was, "Oh, I'm already starting to grieve how much I'm going to be away from the kids and not get to do some of the things I like doing from the kids." I guess I actually needed to weight that much more than I did. I mean, I was trying to give a thought to work-life balance and family versus opportunity, but waking up and feeling so bad, it was like, "Okay, apparently I did not give enough consideration to how much this was going to bother me on the family side. Now I need to reassess the decision and I'm realizing it's not a fit."
I had another one at one point of an M&A opportunity and things felt really good. It seemed really good on paper. And I woke up the next morning and it's not feeling good. And eventually trying to figure out why it didn't feel good, it came down to, there's actually some culture fit issues that just I don't think I'm really going to fit into their culture. And the opportunity seems so cool and great that I was trying to push that down because cool opportunity and numbers and opportunity and all the great stuff and feeling the feels as data kind of literally for me was a reflection of, "Okay, but I think there's some important parts of this that my brain has been ignoring and my gut won't allow me to ignore. I think I need to summon this back up."
Carl: All I really need to say at this point is amen. It's so good. That's so good. I just want to do one thing. Like I want to maybe have you unpack one thing and then I'll give you a couple of just claims. I've got 12 of them. I'll just grab two or three, and we'll just talk about them. But before I do, will you describe for us, and I'm going to push you a little bit on it, like describe for us, you use the words feels wrong or felt wrong. "I made a decision. I woke up in the morning and it feels wrong." Describe that.
Michael: I mean, the proverbial gut feeling, very literally...
Carl: If you were to point to it, it is actually in the gut?
Michael: Yes, yes. If I were to put it, it is absolutely literally physiologically in the gut.
Carl: And how would you describe that to somebody who's never felt it?
Michael: Stomach felt churning or cramped.
Carl: Would you go as far as butterflies? Unsettled?
Michael: Yeah. Unsettled. My brain at least associates butterflies in the stomach with the positive...like a positive, the "butterflies flutter to my stomach because I just saw the love of my life" kind of version. And this is like the bad version of butterflies, like angry gnomes stomping, not butterflies flapping.
Carl: That's really good. Angry gnomes.
Michael: Some angry gnomes pounding from the inside saying like...
Carl: But subtle.
Michael: "You're forgetting something. You're missing something."
Carl: Or not subtle?
Michael: Usually not. Its presence was not subtle. Figuring out what to do with it was more subtle.
Carl: Which is when you go on the hunt for the data.
Michael: Right. What I realized over the years of a various shares of good and bad decisions in retrospect... For anyone who listens to our "Financial Advisor Success" podcast, we have our fair share of people who had some major decision they made that didn't work out in the advisor context. It's a disastrous hire, or it's a disastrous partnership or merger is the most two common that I hear. And one of the questions I love to ask in those instances is in retrospect, could you have seen it coming? And everyone – except the one time it was just completely legit con man fraud – everyone says, "Oh, yeah."
Carl: "I just knew it. I wish I had trusted myself."
Michael: What I hear is some version of, "There were signs, but I ignored them." Or, "There were signs..."
Carl: "I didn't want to see them."
Michael: "...but I didn't go deep enough." Yeah. I think it's that. I think it's, "There were signs, but I didn't want to see them because reasons, growth opportunity, money", things that tend to come, particularly in those types of like partnership merger or acquisition situations where I hear a lot of after-the-fact stories. Many motivated reasons to ignore that feeling.
Carl: That's right.
Michael: And I found as I went through my share of them to...first I went through my share of them to get to, "I should not have ignored that feeling." But then there was a second round for me of, "But what the heck was the feeling?" Because the feeling doesn't bring words. It just literally makes my stomach hurt and feel all knotted up because the angry gnomes are pounding. Trying to figure out what the thing is that's making it not feel good and surfacing that I found is actually what was a difficult skill set to develop and one that has become extremely helpful now. Because now I'll push it to try to get to a decision, and then say, "Now I'm going to sleep on it. If I wake up and the gnomes are pounding, then I can go hunt for what my body realized I missed."
How To Balance Feelings Vs. Data [15:40]
Carl: It would be incredibly valuable to talk about how you trained and practice that. And maybe we can do that in a...let's just see if we have time. If not, we'll do it in another episode. Because here's the...I want to make a few claims because here's why this matters. I would just submit to you that the most important decisions you make personally, but also the most important thing you could do for clients is to help them get clear about this because it turns out almost all your important decisions at the end are made... So here's one of the claims: "Feelings are a legitimate form of data in human decision making, especially under uncertainty. And because financial planning is almost always decision-making under uncertainty, feelings are not peripheral to the work. They are central." And I'm actually trying to make the claim that for me, the claim goes really far, which is feelings are more important, but let's just stick because I know that might cause too many problems. Let's just stick with...
Michael: Don't push your case here, Carl. You're doing well already.
Carl: At least they should be given equal weight. And right now they're given zero weight by most of us in the planning process.
Michael: So look, from my end, I guess it's interesting, even a feelings discussion, I have to come to it from logical brain. Logical brain, me who likes to read a lot of stuff about neuroscience and brain science is...look, there's a lot of really interesting research out there that intuition, gut feelings, our brain's ability to make remarkable fast slice evaluations that turn out to be disturbingly accurate is a thing for reasons that we still don't fully understand from the perspective of brain science, but that like intuition evaluations are remarkably strong and good. And because they occur subconsciously, they're not usually expressed verbally through logic brain. They're not usually expressed through feelings and body expression, which is where gut feelings come from. And so in a very literal "feelings are data", I've gotten intrigued by this because I literally now...if I have a decision to make, I'm trying to set up a situation where gut feeling will weigh in on this decision and either give it a thumbs up or give me an indicator that there's data I missed.
Carl: So good. Yeah. Just even learning, "What does a yes feel like and what does a no feel like?" And angry gnomes is going to be great. We're going to have Kitces t-shirts that have angry gnomes on them.
Michael: As long as... they have to either be blue or...
Carl: They'll be blue Smurfs. They'll be Smurfs. It's fine. Angry blue Smurfs.
Michael: Thank you.
Carl: For me, it often feels like just a puzzle piece that won't fit. The last piece, it won't fit or snap. It's much more subtle. I mean, sometimes it's blinking red lights, but most of the time it's just the same feeling I would have of... It feels forced, the puzzle pieces. And if I look back, I'm like, "Oh, man, I've been feeling that since the very first time this idea even surfaced." You've mentioned something in the body. Here's an interesting...one of the 12 claims I worked on. I've got this position paper I've written about this stuff because I'm actually working on it as a small book. And one of them was this. The body often registers relevance before conscious explanation. And I think that's what you were saying. It's a sub-language. It's a sub-thought. The body can tell you something before the brain can catch up.
Michael: Yeah. The body spotted there was a culture fit problem on our deal before I could even articulate there was a culture fit problem in our deal.
Carl: That's just fascinating. Let me give you another one. "Feelings are embodied early stage. This goes on with what we just said, often pre-verbal information about what matters, what feels safe, what feels threatening, what violates a value, what would create relief, what deserves further attention. In financial planning this matters because many important decisions are not solved by information alone. They're made in conditions of uncertainty, ambiguity, trade off, identity, family history, fear, hope, and meaning. A spreadsheet can tell us what might work, but the body will often tell us what matters." How do you respond to that?
Michael: I'm kind of clicking to the last part. Spreadsheet might tell us, what was it? What's possible.
Carl: What might work. The body will often tell...and this is the kind of key. Often will tell us what matters.
Michael: Yeah. Again, in my feelings are data, data lens, almost everything we do and talk about in financial planning is some version of trade-offs.
Carl: No pure right answer.
Michael: Yeah. Right. It's saved for the present versus save for the...enjoying the present versus enjoy in the future. It's see the kids through college versus how I'm saving for my retirement, right? There's a never ending series of trade-offs because literally we're managing a scarce resource. So there has to be a trade off. Yes to one thing is a no to something else. To me, any version of financial planning is sort of two elements where we're trying to analyze what happens with the current path, or if we do something else. What if scenarios and the like. And then we're trying to make some value decision about which one of those is actually better for us, given our circumstances and our preferences, which is all the...my economist friends will know, we can totally model quantitatively with a utility function. It's just no human being knows how to express their actual utility function in quantitative terms that you can plug into a formula.
So instead, we're vaguely feeling around in the dark, trying to figure out how to weigh these trade-off decisions. And to me, what sticks in that...I mean, I guess from your quote, I don't really see them as like an either or where we're weighing on what the analysis says versus what the feelings say. The feelings are just one of the inputs when you're trying to make the value decision of like, "Okay, but am I going path A or path B?"
Carl: That's right.
Michael: Am I going to choose the what if scenario or not. I can't make that choice without... Sometimes there literally is just a mathematically, "This tax strategy will be better than not doing this tax strategy." But when you get to the real financial planning choices, which are choices, it's not a quantitative right answer. It's a values trade-off answer. And so anything that gives you input on the trade-off is probably a helpful input.
Diving Deeper On "Gut Feelings" To Understand What's Holding You Back [23:52]
Carl: Yeah. It's just super important. I'm going to just give you two more. I want to talk about practical bits for just a minute. Without feeling, thinking gets worse, that's one of the claims, good thinking is not emotionless thinking. Good thinking includes well-interpreted emotional information. And then here's feelings function as information. Feelings are a sort of information when making judgments. Should we listen to feelings or ignore them? That's not the question. The question is, what is this feeling information about, which is kind of what you were saying on your hunt.
Michael: Yes. Yeah. I'm like, "Why is this bothering me? I'm feeling some hesitation for this decision. Let's pause for a moment here. Why does it not feel good? Why is the gnome poking right now?"
Carl: The Smurf.
Michael: Just like that one long finger: why is the gnome poking? But then that's what takes me down the rabbit trail of really just trying to sit down or I usually...I mean, very real, I'll take a walk to get fresh air. "What is bothering me about this?" There's something there. And if I can pause enough and focus on that, usually I can get whatever the thing is to surface from unconscious to conscious. If I dwell on it enough, eventually the mind surfaces the thing, but I have to create some space for it, which starts with acknowledging and holding space for the feeling, "Okay, I woke up this morning. It's not feeling good. Something's not right."
Carl: "The feelings might be about the decision—" I worked on this quite a bit— "The feelings might be about the decision, but it might also be about hunger, fatigue, shame, social comparison, old family stories, recent market news, or fear of disappointing someone." So the skill is not necessarily trust your feelings, which you've been pointing at. The skill is interrogate your feelings.
Michael: It sounds more aggressive, but yeah.
Carl: Yeah. I mean, we can say, try to understand them, pay attention to them, include them in the analysis. It's not necessarily trust them. It's like, say, "Oh, interesting. What's that all about?"
Michael: I guess, because the distinction for me, look, sometimes...
Carl: Sometimes you're just hungry.
Michael: Usually the good feeling means yes. Sometimes the bad feeling means no. Sometimes the bad feeling means there's just some issue or part of this that I had not fully addressed or solved for. I just need to bring back to the conversation. I think that's why if the gut is yes, I'm okay to go with yes. If the gut is no, I'm not necessarily a no. It's probably a fairly likely no, but I...
Carl: Further consideration.
Michael: Often it's a deal-killer thing, but maybe it's a solvable thing, which you're right. I guess I wouldn't use the word 'interrogate', but yes. Then I'm like...
Carl: Explore.
Michael: I'm interrogating. I'm exploring for what's the thing. And is it really a deal killer, or is it something that could be solved, or is it something else entirely that's just running in parallel?
How To Ask Clients About Their Feelings In Meetings [27:28]
Carl: As we wrap up, let's talk about...this is goose bump territory for me. I get so excited about this idea, and here's the reason I feel so strongly about it. Because it turns out we humans are not very good at this. If feelings are that important, and I think getting increasingly important, I think as uncertainty ramps up, feelings actually get more important. And being practiced at sorting out what it feels like. And what I'm finding from my book tour is... I had a conversation on book tour with somebody who I'm just going to call Jimmy. It's definitely not his name. Jimmy was literally like, "I don't know what you're talking about. I don't even know." I was like, "What does it feel like when..." He was like, "I had a bunch of anxiety around the decision." I was like, "Okay, great. How did you know that? What did it feel like?" "I can't even..." I was like, "Where in your body?" He's like, "I can't." And I was like, "I know. I'm just saying." What did I call him? Jimmy. I'm picking on Jimmy because we're all Jimmy. And I think our ability to do that ourselves will translate in our ability to help clients do it. And so let's just practically, for a minute, let's just do two minutes on how do you see this? Imagining a client who's like...and you even said a couple of these. All the numbers were good. All the things said that this was...you used the word, it looked good on paper, but I made a different decision. Where does that show up with clients? How do we get better at it? How did you get better at it?
Michael: The place it shifted to me, and I mean, frankly, I find this can crop up anywhere from clients to teammates, to leadership with your team, to direct reports if you're a management role. There is actually a language shift that...I mean, I think I've really just started to bring in over the past year or few in my conversations that if we're talking about a new plan, a new project, a what if scenario with the client, I would ask something like, "Here's option B, what do you think of that option? How does that seem to you?" And whatever conversation ensues. And the language shift for me is I've actually gotten much more intentional to ask or say, "Here's the option or here's the new thing. How does that feel to you?"
Carl: So good. Yeah.
Michael: And just using the word feel because sometimes at least more often, if we create a safe space for it, I mean, someone will say, "I don't know. It doesn't feel great. I'm feeling concerned. I'm not feeling good." If there's a negative feeling, a negative feeling can get espoused if you created a space for it and use the word. "How does it feel to you?" "Not great." "Can you tell me more about that?" "Well, I don't know. I'm not sure. It just doesn't feel great." "Cool. Can we just hang out here for a moment and try to get to..."
Carl: "What if we sleep on it?"
Michael: What that is? I'm not even in the sleep on it phase. I mean, in real time, you're already expressing something doesn't feel right. So I'm not blowing off or discounting that. I actually want to elicit that because your gut is weighing in with some data that your brain hasn't caught up on yet. So can we actually now hang out for a moment? What doesn't feel good? Tell me more about that. What feels off?
Carl: I think it would be really good to not overcomplicate this and just end right there. I think, to me, that's a very practical thing that would be...I would love to hear from any of our listeners. If you just go try this next time, just as you present options, trade-offs, just try, "Here's the option." And look, I was expecting you to say that before. You were like, "Here's option A," and I thought the words that were going to come out of your mouth were, "How's..." I think we probably do this more than we think we do because it's like a normal bit of language. We just don't mean it.
Michael: I realize my...I don't know why or where I got this. I would often ask, "How does that seem?" I don't know what book or whatever it is that I read when I was young that clicked that particular phrase, but what do you think and how does that seem were words I realized I used a lot. They were pattern words for me. And I've been trying to force myself to start asking, "How does that feel?"
Carl: Try that at home. Next time you have a client meeting and you've got options, it could even be prospect meeting, "Hey, should we meet again? How does that feel?" But I love the idea of we're trying to make a decision. There's a spreadsheet, we've talked about it and we say, "Hey, what do you think? How does that feel?" And just listen to that. That does not feel odd to me though. I don't think a client would be like, "What do you mean how does it feel?" I just think if you were casual about it.
Michael: In the moment, I know it works fine. I think it's why I liked this theme as you kicked it off. I don't set that up because I'm trying to get a gut feeling, thumbs up, thumbs down decision. I say it because if you say it doesn't feel good, I want to know why, because that's the actual conversation. There's some other factor in the room that's weighing on the decision that we haven't voiced yet ostensibly, because if you told me, "I really hate 'blank'", I wouldn't have presented this as an option. So if you're feeling not good, there's some other input to this process that you didn't actually articulate. Like, it's cool. I can take it personally. As we've done on prior episodes, I'm now basically convinced all clients lie about their goals when they first tell me, not because they're trying to be deceptive. Because they don't know themselves fully yet. So I never believe them. But in that same vein, I'm hunting for more inputs. I'm hunting for more data that wasn't brought originally. And how does that feel to you? I find surfaces that conversation more, because if there's something we didn't include, there's a negative feeling in response to the feeling question, and we can hang out there for a bit and try to unpack, what doesn't feel good? What seems off? Whatever words they use trying to describe it.
Carl: Yeah. Yeah. And again, I don't really like, but even, "Oh, it doesn't feel good." I'm a nutcase for this kind of stuff. Because I couldn't leave the room without saying, "Describe that for me, what does not feel good?" And all we're doing there is teaching people to slowly start recognizing how the body communicates to them, because it turns out it's different for different people. But let's not overcomplicate. Just go try inserting how does it feel as part of your process, and send Michael an email and tell us how it goes.
Michael: I'll forward them all to Carl. [email protected], and I'll just set up an auto forward to Carl.
Carl: That's perfect. That was amazing, Michael. Thank you.
Michael: Awesome. Thank you, Carl.
Carl: I feel much better.
Michael: You feel better? I'm so glad. Thank you.
Carl: Cheers.
