Developing A “Good Enough” Mindset To Increase Financial Contentment

Many Financial Planning Clients Are Likely Maximizers, Not Satisficers

According to Professor Barry Schwartz, author of the great book The Paradox of Choice: Why Less is More, there are two types of people in the world: Satisficers and Maximizers. Satisficers are those who can feel content with ‘good enough’. Maximizers, on the other hand, are only able to accept ‘the best’ or ‘the most’; they can never settle for less and always push for the next level.

Given the proclivities of Maximizers and Satisficers (which can sometimes be reflected in the individual’s personality), different behaviors will often be expressed between each type. For example, Schwartz’s research has found that, compared to the actions and behaviors of Satisficers, Maximizers tend to spend more time comparison shopping and comparing themselves to others.

Perhaps most compelling for financial advisors, though, is the idea that there are probably many wealthy financial planning clients who have Maximizer tendencies. There are a few reasons for this.

For starters, Maximizers are often individuals who continually strive to earn higher pay, to climb the corporate ladder, or to grow their own business. Understandably, given their drive to constantly achieve and attain more, these individuals may feel compelled to seek help to achieve their Maximizer goals – they want their investments to perform well or to get expert tax advice to maximize their income. Additionally, because Maximizers tend to be wealthier individuals, it is also likely that they simply have the means by which to become a financial planning client – as Schwartz says in the book, the wealthy are Maximizers because they can afford to be.

Satisficers, on the other hand, may pause along the way at some point and decide, “Yes, this is good enough.” They tend to be more content with where they find themselves and don’t necessarily have the same need as Maximizers to keep accumulating more. Thus, they may be less likely to seek professional help from financial advisors to help them maximize their portfolios (although they could still certainly become a client for other reasons; for example, they may simply want help managing their finances, to preserve their wealth, or they may have general questions about retirement).

Notably, this same sentiment can be found in related financial planning studies. For example, research by Brad Klontz, Martin Seay, Paul Sullivan, and Anthony Canale examining money scripts – the lessons we learn about money as we grow up that are ingrained in us as ‘scripts’, and that we may unconsciously follow as adults – finds that the wealthy often have a money status script that involves striving for the newest and the best, and that they have the means to realize this script.

An interesting consideration for financial advisors to make when working with Maximizer clients is how Maximizer tendencies can impact how they accept (or resist!) financial planning advice and the type of advice they want to receive. Because clients with Maximizer tendencies may have sought out their advisor expressly for the sake of maximizing (whether this is with regards to their investment holdings, portfolio returns, access to a large universe of funds, or total income), there is likely a high expectation of – and perpetual focus on – maximum performance.

Accordingly, the challenge for financial advisors is not only to convey the relevance of comprehensive financial planning for Maximizer clients (because it’s obviously not just about how well their portfolio does!) but also to help them realize that good financial goals, in pursuit of a happy and fulfilling lifestyle, do not need to rely on constantly striving for the most of everything!

Why Maximizers Tend To Be Unhappier Compared To Satisficers

While Maximizers may be highly successful because of their inherent drive for more, their biggest problem is really that no one can ever be fully maximized. And, as Barry Schwartz notes in his book, Maximizers do not like this. There simply are no silver bullets or portfolio allocation models that will perform perfectly in every market, which sets up the Maximizer for failure every time.

Accordingly, when working with a Maximizer, underperformance (or even average performance) of the market can become a major point of contention in the financial planning relationship. The Maximizer may have hired their advisor specifically to ‘maximize’ the portfolio, but because the portfolio can only do as well as market conditions allow, Maximizers may understandably (whether unjustifiably or not) get upset.

Maximizers Often Suffer Regrets From Not Being Able To Have It All

And because they can never have it all, Maximizers will generally suffer a lot of regrets. Hindsight is always 20/20 and this can be very disconcerting for Maximizers – How did they (or their advisor!?) not know to sell!? How did they (or their advisor!) not know to buy? Or not see the bubble? They are never (or very rarely) going to be fully satisfied with any result, no matter how hard the advisor (or even the client themselves) tries.

Maximizers will find it very difficult (if at all possible) to accept the idea that everything will turn out just fine in the end. What is more, despite that Maximizers tend to be wealthy and often have well-paying jobs with high incomes, they may not feel that they are doing as well as they really are. Not only do they have less time to enjoy their wealth (because they spend so much time and energy striving to make more), but the fact that there are others who are richer or who may be doing better than them also tends to make them feel very uncomfortable.

Relatedly, because they tend to compare themselves to others, Maximizers can find it difficult to accept that someone else may have profited when they themselves did not. Enter the common practice of Maximizers using unrealistic comparison groups with which they measure themselves. For example, a client may compare their own decision-making or investing ideas to those of Elon Musk, Mark Cuban, or some other (lucky) financial guru. Are these realistic comparisons to make? Of course not.

A common sign of a Maximizer might come up when a client asks how they compare to the rest of the firms’ client base – they want to know if they are the biggest or best client, and how they compare to all the other wealthy families that the advisor helps. Is that any more realistic (or relevant?) than comparing oneself to Elon Musk or Mark Cuban? No, not really. All clients are different, and a single-dimensional comparison, like income or net worth, does not really do much.

Yet, like the overarching drive to maximize investments, confirming that a client perhaps has the biggest portfolio in the firm may only make them want to maximize even further. For example, knowing that they are your biggest client may spur them on to ask for special pricing or a deep discount, with the idea that no other client deserves the same deal. And while conceding to their request might make them happy at the moment by affirming they are the biggest and/or best, the reality is that these moments are often fleeting.

Satisficers Can Easily Find Contentment With ‘Good Enough’

In contrast to Maximizers, Satisficers would have a very different attitude and may react quite differently. It would be highly unlikely for a Satisficer client to ask for the best deal in the firm, let alone even broach the subject of how other clients are doing in comparison.

They are more likely to be content knowing they are simply getting helpful advice and are on the right track to reaching their goals. Similarly, they would probably be less concerned than a Maximizer about portfolio performance during a market downturn. They might even say or think, “We did the best we could, we are fine where we are, and that is what really matters in the end.”

Essentially, Maximizers will aim to keep maximizing, no matter how much they have – it’s simply what they do. Which is not going to make them (or their advisor) any happier, because as stated before, total maximization is simply not possible. No one has that much time, no one has that much money, and no one has that much processing power to truly search through all possibilities, let alone strive for and achieve the best of all of them.

Helping Maximizer Clients Experience More Financial Contentment

Given that many financial planning clients are likely to have more Maximizer tendencies relative to Satisficer tendencies, it may be helpful for advisors to understand how to work with these clients… and perhaps even to encourage those who may be open to the idea of considering a Satisficer point of view.

Barry Schwartz asserts that while we generally tend to be either a Maximizer or a Satisficer, as is the case with other personality traits, there are often moments where the opposite side of our primary trait will show through. Take introversion, for example; perhaps someone who loves financial planning tends to be more introverted and generally very shy, yet given the opportunity to discuss financial planning, they find they can talk endlessly and somewhat effortlessly about that particular topic.

In other words, under the right set of conditions (e.g., having the right topic to discuss), some individuals can exhibit opposite personality traits (e.g., the introvert may be so comfortable talking about their favorite subject that they may appear extremely extroverted). Along those same lines, it is possible for Maximizers to behave a bit more like Satisficers, given the opportunity and structure to make it happen… and the advisor is in a position to provide both.

Encouraging Maximizers To Put Goals In Perspective

Satisficers tend to naturally prioritize their goals without prompting. Satisficers, at some point, will decide that having a certain level of income is enough for them, so there is no need to find that next ‘better’ job – the ‘good enough’ job is the one they have now, which allows them to focus on other things that are perhaps more enjoyable (e.g., like planning a vacation or remodeling their home).

By contrast, a Maximizer tends to believe that all of their goals should be fully maximized and equally important. Naturally, they assume that the advisor will be on the same page as them. Although Maximizers can often consider everything a high priority that they want to pursue at full speed, it does not mean that they have to apply this energy to everything they do. Therefore, encouraging Maximizers to rank their priorities can help them put their goals into a more meaningful (and realistically attainable) perspective.

Advisors can help their Maximizer clients define what really matters to them so that if they must maximize, at least they will focus their energy on where it counts for them the most. So instead of simply asking the Maximizer what their goals are, help them to prioritize their goals.

Example 1: Frank is a Financial Advisor and is meeting with his client Clara. Frank suspects that Clara is a Maximizer and wants to help Clara prioritize her goals to lessen the mindset that everything needs to be fully maximized at all times, all at once.

Clara has indicated that her current goals and priorities are to improve her investment performance and to have a fun travel trip next year.

Frank has the following conversation with Clara:

Frank: Thank you for sharing your goals and objectives – this is great, and we can help. If I may, though, just to get a sense of priority, can I ask you which goal carries more weight for you?

Clara: I care about both goals.

Frank: Absolutely, and I am not saying that both are not possible. I just want to understand which one keeps you up at night or, conversely, which one actually makes you the most excited or would bring the most fulfillment out of our work together.

Clara: If I have to choose, I choose…

It doesn’t really matter how that last statement ends. If Clara says that investment performance is the top priority, then Frank can set goals and expectations for Clara to maximize her investment performance – he knows where he needs to place his time and energy first. Conversely, if Clara says having the assurance that she can take that trip next year is more important, then that is where Frank will want to focus his energy to plan for success.

While it’s possible that maximizing outcomes for multiple goals may actually turn out to be the fortunate outcome, the real point is that asking the client to prioritize goals can represent a shift in mindset for a Maximizer – by emphasizing that it is okay to consider that some goals are less important than others, it can be easier for them to accept that the best plan of action is for most of the work and energy to be focused on the most important goals first.

Identifying Realistic Comparison Groups

In addition to encouraging Maximizer clients to prioritize their goals, advisors can also help them identify more realistic comparison groups (which includes comparing themselves to themselves!).

The fact is that people like to compare themselves to others – we like social proof, and we like to have buy-in about our decisions from those around us. It makes us feel good and secure. Even so, the reality is that advisors can’t stop clients from comparing themselves to others. However, they can help them find healthier ways to experience the comparisons they make.

For instance, advisors can encourage Maximizers to compare themselves to themselves by considering their progress over time. Satisficers generally tend to compare themselves less often and, when they do, they are more likely to compare themselves to themselves or to a person or group who is similar and very relatable to them (e.g., a family member or friend).

Example 2: Frank, the Financial Advisor, is again meeting with his client Clara, who he has determined is a Maximizer. Frank knows that Clara gets very anxious about having the best-performing portfolio in the firm and wants to help her find other ways of comparing herself to others.

Frank has the following conversation with Clara:

Clara: So, how do I compare? How am I doing when compared to the rest of your clients?

Frank: I think you are doing great. It is hard for me to make a comparison of you with the rest of the clients; everyone is so different. However, since we started working together, I have seen you make very impressive strides towards your goals. I have really enjoyed working with you and admire your passion for improvement and growth.

In the above example, the advisor addressed the client’s comment and their need to compare but gave it a different spin. It does not really matter how the client is doing compared to others; what really matters is that they are making progress.

Reframing the comparison so that the client considers how far they have progressed since a certain point in time and offering a genuine compliment to recognize their progress can be all that the client needs to drop the subject and experience the gratification of a job well done.

However, if they continue to push and continue to ask how they compare to others, the advisor might opt to give them a comparison, but reframing so that the focus shifts to gratitude and a more realistic comparison group.

Example 3: Continuing the conversation from Example 2, Frank, in his meeting with his client Clara, needs to find ways to deflect Clara’s insistence for him to compare her to other clients.

He steers the conversation by explaining the nuances and uniqueness of each client’s situation:

Clara: Right, I hear you. I made progress – go me. But I really want to know, am I outperforming the average client here? My friend Bobby said that he had a 15% return this past quarter. I think I did well, but I do not know if I did that well. Did any client at this firm achieve results like that?

Frank: Good question, but, as you may guess, it’s not a super straightforward one to answer. For example, remember when we were designing your portfolio and assessing your appetite for risk as well as your ability to take those risks? These were very nuanced discussions that allowed us to maximize your situation to our fullest ability. We have those discussions with all clients, and each person has a unique answer.

Moreover, you have done very well for your risk-adjusted performance. We took no unnecessary risk, just all the appropriate risk. So if we compared your current portfolio to what it looked like two years ago when we first started working together, I would say you performed very well and did better than if we hadn’t made updates to our allocations over time.

Clara: Thanks. I really like seeing our hard work pay off.

Frank: Great, I do too. This is hard stuff, and markets are not controllable. We have put in a lot of work, and it did pay off – I’m grateful for the teamwork and open communication that we have. The performance is a nice benefit too, but our relationship and the way we have been able to work together over this time together is also huge.

Clara: Yes, you make a good point. I am really happy about the performance. But I, too, am glad we have built a good relationship.

The advisor has answered the client and given them an honest and useful way to make realistic comparisons. Importantly though, the advisor also took the time to remind the client that performance was only part of what they achieved.

When the advisor expressed how grateful he felt for the relationship and the efforts they both made, he helped the Maximizer to recognize the value of the relationship (over just the performance of the portfolio), and thereby also helped them to consider flexing their own gratitude muscles (without presenting themselves as too preachy or forceful). Over time, this can be a very effective way to help Maximizers experience joy and contentment around their finances.

Again, while maximizing may have brought Maximizer clients great success, there are other ways to approach maximizing – like maximizing gratitude – that may help to mitigate the regret Maximizers experience from the never-good-enough trap that they tend to fall into.

By helping Maximizers find more realistic comparison groups, and even by considering themselves at earlier periods in time as an appropriate benchmark comparison group, advisors can help alleviate (and even prevent!) some of the stress and regret Maximizers tend to subject themselves to.

Managing (And Adjusting) Expectations

Last but not least, advisors can help teach clients to expect that adjustments will need to be made in their financial plans and that past decisions, once made and implemented, can’t be reversed. Basically, we all know that we can’t go back. We can’t recreate that bubble; we can’t go back in time to re-sell or re-buy a stock when it would have been more profitable to have done so.

Yet, we can decide how we want to proceed in the future and adjust accordingly. We can commit to trying something new; in many ways, this can ease some of the Maximizer’s drive for perfection.

Adjusting Expectations Can Lead To More Satisfying Outcomes

Moreover, as the Kitces & Carl Podcast has often noted, advisors can promise nothing about a financial plan, except for the fact that it is going to be wrong. While this is certainly a bold statement that not all financial advisors are prepared to make, advisors might consider the power of this statement when sitting across the table from a Maximizer client who may be resistant to new ideas or alternate solutions.

This is not to say that advisors should use this line with their Maximizer clients; instead, remember that good financial plans will take into account numerous scenarios. And by encouraging Maximizers to consider alternate outcomes, advisors can help them appreciate how being flexible – and not focusing so hard on achieving a single outcome they may have locked onto – can actually result in better outcomes!

The key point here is that advisors can help Maximizers manage expectations if they can get them to buy into (and even expect) making adjustments, and that these adjustments to their plan are a much more realistic approach than the idea of regretting a bad decision and going back in time to fix it.

Recent blog articles by Derek Tharp and Justin Fitzpatrick have also emphasized the central role of adjustment in retirement planning and how adjusting a plan over time can produce better outcomes for the client (both financially and psychologically) than by simply determining whether the ultimate outcome will end in failure or success.

Accordingly, advisors can teach Maximizers that financial plans are designed to change over time; the advisor’s job is to work together with the client to find the right adjustments to the plan through multiple iterations as the world around us evolves – and as our needs to respond also change.

‘Micro-Plans’ Facilitate Flexibility By Shifting The Focus From The Outcome To The Process

From a learning theory perspective, advisors can design ‘micro-plans’ for clients to keep them focused on making small adjustments to help them adopt the mindset that considers outcomes – whether they are successful or not – as learning opportunities to adjust and improve. Advisors can use these smaller plans to emphasize that, while they can’t ensure maximum success, they can certainly provide Maximizers with more opportunities to make small pivots and to discuss new ideas and perceptions as they arise.

This does not mean that we want Maximizers to think they get to make dramatic shifts in the heat of the moment (whereby a market crash justifies a wild selling or buying spree). However, it does mean we want Maximizers to agree to assess and re-assess their situation objectively, making small changes here and there along the way.

And perhaps by shifting the focus from the outcome of maximum performance (regardless of how that outcome is achieved) to the process of making potential gradual changes to create a favorable result, Maximizers can rest a bit easier knowing they are in control and on track with their plan.

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Maximizers, by their very nature, want to maximize results. It is how they know to be successful and even, to a certain extent, how they allow themselves to enjoy what they have built. Yet, simply having or achieving more does not necessarily equate to more happiness or contentment, especially when we can’t let go of regret, or when we assess ourselves against unrealistic comparison groups – even in light of objective success.

Fortunately, there are some relatively simple things that advisors can do when they find themselves in front of a Maximizer. They can help clients prioritize what really matters most so that they can identify where their maximizing tendencies will be best spent and where the client sees the most value. They can help clients to use more appropriate comparison groups so that they aren’t needlessly investing energy working with unattainable benchmarks. And last (but not least), they can use micro-plans that do not rely on large, dramatic actions but lots of small adjustments and changes so the client can focus on the process to maximize smaller bites. And focusing on the process can ultimately serve to help clients maintain a healthy perspective on the goal they are striving to achieve, which can also help them stay focused on their most important priorities.

Ultimately, advisors may not be able to turn a Maximizer into a Satisficer, but implementing some simple strategies – and perhaps even helping Maximizer clients appreciate some of the tendencies that Satisficers exhibit – can lead to less regret, more contentment, and a happier client overall!