Last week, I was back in the junior high schools, visiting the two classes that I taught as part of the Junior Achievement program. It was the last class of the course, and I went in with the idea of finding out what they learned from their fantasy stock trading. The first thing that struck me was how few of them really took an interest in this project. It’s likely that, as with most people, they simply don’t see it as relevant or useful to them. The same was often true when I worked as a financial advisor. It seems likely that people hire an advisor specifically because they don’t want to take responsibility for their investment choices, even though their employer (or former employer) has left them with that responsibility.
But what was even more striking was when I asked what they would do differently, if they could do it over. One boy timidly responded: “I would work alone.” He didn’t want to insult his teammates (they worked in groups of four), but he would have preferred to work alone rather than with his team. The reason was that they didn’t have any strategies for working together and when disagreements arose, they weren’t able to negotiate the difficulties. That reminded me of the fact that many couples fight about money and the idea that money is one of the leading causes of divorce. If I teach the course again, I’ll offer the following solutions to help the students work better together in their teams.
Separate the responsibility. The students began with $100,000 of fantasy money. A team could grant each member $25,000 to invest or trade as they please. The result would be the cumulative result of each player. This would have the benefit of allowing each member complete freedom. It has the drawback that each person experiences the consequences of everyone’s decisions. This could work for a couple, especially if they’re willing to retire (or travel, or spend) separately if that’s the result of their financial decisions.
Make democratic decisions. It’s possible to vote on every decision and to respect the will of the majority. This has the benefit of subjecting decisions to additional scrutiny. The expectation would be that if a member has to pitch the idea in order to sell the team on it, the best ideas will usually be acted on. But in a team of four, or a marriage of two, this isn’t mathematically possible. Another possibility is to make unanimous decisions. If a decisions appears good and both or all members agree, it is implemented; if not, there is no deal. This has the same benefit as the democratic approach, but the drawback is the possibility that one person could block the team, which could result in total inaction.
Authorize a single decision-maker. This seems to be the approach used in most companies. One person is responsible for the results of a team and that person makes the final decision. They usually try to get input from team members, and they often try to keep everyone happy. But to keep the project moving forward, they will sometimes make assignments and executive decisions. The benefit is that this approach avoids inaction, but it has the drawback of potentially sidelining the contributions of individuals. Hiring a financial advisor might fit with this approach.
A hybrid approach. In order for a strategy to work, it needs to fit with a team’s personality, preferences and situation. A couple may choose to have some separate accounts and some joint accounts, as well as working with an advisor, but agreeing never to proceed with changes unless they both agree.
Have you adopted any of these approaches in your family? Is there another approach that works for you? Would you prefer to “work alone”?