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The Financial Lesson That Took Me 20 Years To Learn

By Tom Shepard, 01/04/17, 5:15PM EST

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Money is about much more than what we think. Here's the story of how I learn an important lesson about finance and life.

Modern finance owes much to science and science just as much to modern finance. In other words, they leverage each other. How long has this been going on?

Modern genetics has begun to make it clear that while we are wired a certain way we are not doomed by our genes. Nature and nurture both play pivotal roles in how we develop and grow. If we have the gene for shyness we can accept that we are shy but work on developing our other attributes to overcome this shy temperament. It is also true with value. Some of us, myself included, prefer ease and leverage. Others find value in hard work and a job well done. Some are inspired to share and others seem wired to take. We are often encouraged to spend but equally important is the nature to invest and create. There are many stereotypes when it comes to money. Perhaps at least one for each type of human nature.  Here’s how I came to know this for myself – may you also learn to find your financial nature.

In 1986 I was required to make a decision about where to go to college.

I had several choices from Brown and Cornell to Clarkson and Syracuse to State schools in NY. The biggest influence in my life was my father. We had discussed the options and it was very clear what he was willing to do to support my getting a college degree. I decided that since I was strong in Math and Science I would pursue an engineering degree and he was willing to pay for a state school. That way I would leave college with no debt, which was an important point in my Dad’s eyes. He had a small mortgage on the house as his only debt, had worked to put himself through school and was a hardworking manager at an industrial plant in Syracuse, NY. My Dad’s values were those of a grown up and if I had other ideas I didn’t have the confidence to assert them.

My choice was Brown University but somehow my acceptance there wasn’t in the cards. Had I gotten in I remember thinking it would be worth whatever amount of debt, or work or creative funding would be necessary to get the job done.  After that disappointment, I explored my next two options. Clarkson was a private engineering school in New York up by the St. Lawrence River. The other option was the University of Buffalo. Both had excellent Engineering programs. Clarkson had a Division III lacrosse team. UB had a club team. Clarkson would have required me to take out significant loans and UB was free. Growing up in Syracuse perhaps made me a little jaded about other athletic programs. I honestly didn’t see there being much difference between a division III program and a club team. I was also 6’1” and weighted about 175 lbs. Cornell was interested in me for football (middle linebacker) but I couldn’t imagine putting on another 20 or 30 pounds. I liked to run rather than lift weights and so lacrosse was the more natural sport for me. As a senior I hadn’t been heavily recruited and I was about to take the path of least resistance.

I had a good senior season and was selected to the first team all-county team and played in the Section III all-star game.  I had accepted entrance to the University of Buffalo and was headed there in the fall until I was approached over the summer by John Desko of Syracuse University. He had seen me playing summer lacrosse up at the university with some friends and encouraged me to apply. The person in charge of admissions was actually the father of a kid I played baseball with. In the eighth grade I had stormed off the field one very hot July day in an incident that involved catching his son’s pitching. I half wondered if that curse laden tirade would now stand between me and acceptance to SU. I got the call very shortly after submitting my application and Syracuse was prepared to offer me a partial scholarship to come play lacrosse for one of the best Division I programs on the planet. You’d think I would have been overjoyed.

My Dad and I sat down and looked at the offer.

We crunched some numbers. While the scholarship would help, it still left a gap between my Dad’s agreed upon contribution and the total cost to attend SU. We discussed taking out loans and living at home as possible alternatives to meet the gap. Mostly I turned inward to try and decide what to do. I knew I wanted to make good money. I knew engineers made good money right out of school. I knew that I also wanted an MBA. Syracuse didn’t have as good a reputation in engineering as UB. One school would saddle me with debt and the other would be paid for in full. One would be easy. Play for a club team and be a star and maybe a founding member of a new varsity program. After all Lacrosse was the fastest game on two feet and the fastest growing sport in the country. The other would be hard. Hard to compete against some of the best players in the country. Hard to come up with the money to pay for school. Hard to imagine my getting bigger and stronger and faster and more skilled. I decided to do what was easy. I turned down SU and went off to Amherst NY and the University of Buffalo.

In 1987 I attended the NCAA Lacrosse final four in Rutgers NJ. I had wrapped up a pretty decent year playing lacrosse for UB and getting decent grades in the engineering program. I had my own summer painting business and decent money coming in so I made the trip with friends to cheer on the home town team. They lost that year but the next three years they would win the NCAA championship. Guys I knew in high school and had competed against were at the top of the lacrosse world. There’s no doubt that I was now second guessing my decision. I wondered again why I had made the decision I did. The next year my grades dropped and I decided to try a degree in management instead of engineering. I didn’t like that any better. I decided to join a fraternity to see if belonging to another sort of team would make the experience better. We won the pledge football tournament. Whoo hoo.  I had plenty of money in the bank but got my first credit card and tried to buy friendship and influence by putting the card on the bar and running up a tab.

I did okay that year but the trajectory was not good. The year after my grades suffered even more. I was drinking and partying and spending money 5 days a week and working menial jobs to try and generate spending money. In between my Junior year and my first senior year I made a decision that I had to get out. I had to go somewhere and play real college lacrosse. I found a path over the summer by playing with friends from home in summer tournaments during the week and traveling to play on the weekends.

I put out the word that I was available and the signal was eventually picked up by the assistant coach at Rochester Institute of Technology.

He was the goal keeper in many of our summer games. My dad and I met the head coach. They made my dad comfortable that this step was a step in the right direction. I laid out a plan to play three more seasons. It meant getting my degree in 6 years, but several quarters would need to be spent working on paid co-op assignments that would help offset the cost to attend and preserve my remaining eligibility. We agreed on an engineering management program in the school of packaging science. Most importantly it meant that I would need to take out loans.

The move was a good one. The team accepted me right away and I found lodging in the basement of the only student house on campus. With all the hard undergraduate classes out of the way the work load was easy. I was able to play my way into shape and the team did well. We made the Division III tournament and lost to Hobart in the first round but offered them the stiffest competition that year. The icing on the cake was my selection that year to the All-American squad as an honorable mention. I played for two more years at RIT and again received the All-America honors. Senior Year I was selected to play for the North squad in the annual North South game at Homewood field on the campus of John’s Hopkins.

Success. Sure. But it still made me wonder why I had decided as I did.

This question haunted me and making peace with it came slowly.

Why had I decided to pass on a scholarship to play lacrosse at Syracuse? Was it the engineering program? I eventually ended up teaching math and coaching lacrosse, basketball and football at a boarding school in Maine. It wasn’t the engineering program. Was it a lack of confidence in my ability to perform at the highest level?  Post college playing in the Lake Placid Summit Lacrosse Tournament we went up against the Gait brothers of Syracuse fame and won. Our team was selected to go to Australia and represent the US in the Masters Division games.  Over and over I had proved to myself that I could play with the best at every level. It wasn’t a lack of confidence. Or was I intimidated by the cost and prospect of borrowing money? I’d never done it before so it wasn’t a bad experience helping me decide.

A series of changes, and one big lesson.

In 1996 I decided to make a change again. I had been teaching students at Gould Academy about money and finance and that math really does apply. I made it real and interesting to them. They encouraged me to pursue what I do now. I help teach people about money. But more than just teaching them the who, what, where, when and how I teach them at a level that is beneath all that. Why? Why we make the decisions we do has everything to do with something very natural about us. Discipline alone and math alone are not how we make our choices. Beneath and inside there is a nature that is hard wired to sort and trade value based on who we are as a person.

I made my decision to not attend Syracuse because of my nature. It took me 20 years to sort it out and to name it. And by doing so I have come to know myself, my Dad, my kids, my clients, my friends at a deeper level than I ever felt possible.

In 1997 I was struggling in my new chosen profession as a financial advisor. What had come easy had all of a sudden turned hard. For nine weeks I had no success bringing on new clients. Somewhere along the line I started telling lies to my boss about the level of activity that I had going on. Finally I broke down in his office and shared with him what was really going on. I told him the truth. That I was struggling and had no idea why. No idea why, what had been easy, was all of a sudden so hard.

He sent me home with a book. The Road Less Traveled by M. Scott Peck. The first line gave me instant relief. “Life is Difficult.” It would still be several more years before I could put words to why that phrase changed everything for me. But it changed me because it spoke to me. It spoke to my nature.

I have come to realize that my nature is to prefer leverage and ease.

Anything counter to that was always to be avoided and anything in alignment with that should be pursued doggedly. Over time there is a whole set of words and ideas that are far more compelling to me because of how I am wired. But if I allow this nature to filter out the other ways people exist in this world then I am limiting my potential to grow and develop into a better version of myself.

If it is true for me then could it be true for everyone.

In 2007 the financial crisis was just about to unleash its fury on the country and the world.

The level of leverage in the financial system had become untethered. Dave Ramsey railed about the evils of debt while millions of first time home buyers were sold the illusion of home ownership through highly leveraged products. Jack Bogle touted the benefits of low cost investing and just sticking with stock based index investing and ETF’s had been launched to compete with mutual funds. In the following year index investing lost over 50%. Suze Ormond argued with Dave Ramsey about the best way to get out of debt while attacking the entire annuity industry as unscrupulous.

The wealthy hired advisors to help them avoid taxes often by funding charities to pursue the same roles as government. Bill Gates and his foundation was hired by Warren Buffet to help him do good with his wealth. Mr. Buffet challenged congress to come up with a tax scheme that would hit him harder than the secretary who worked for him. The Fed was about to lower interest rates to punitive levels for those accustomed to CDs and other conservative investments and banks began charging fees for the convenience of being able to access your own money and protect us from embarrassment at the cash register.

There are many different problems in this world and each is an opportunity for somebody. You and I are going to be attracted to something. Naturally it could be thought that your upbringing and culture had something to do with what you gravitate toward. That is partly true. But our educational system was founded on the ideal that you should not get attached to what you are naturally. You should get outside yourself, be exposed to many ideas and experiences. You should be well rounded. These ideals were part of the founding of our country and trace their roots back to a sermon preached by Protestant minister Thomas Shepard in Cambridge Massachusetts in 1637 at First Church Congregational UCC. “Do not rest in your duties” was a phrase culled from that sermon. It was a call to continue developing as a human being. Do not rest in the contentment that comes from doing your work, most especially if it comes naturally to you. Instead the mantra was used as the foundation of what it would take to make a “Harvard man.”

A liberal education sought to round out a man and subdue the human nature with an iron will and steel like discipline.

This denial of human nature is at odds with how to be successful.

To “Know Thyself” is just as important.

The greatest wealth is often created and gathered in by those who leave the likes of Harvard to strike out on their own and pursue what interests them. A single-minded focus and determination fed by the inspiration of the creator may be a better path to success. Discover your gift is just as valid as deny your weakness. “Know Yourself” was at the heart of Egyptian and Greek philosophy. Symbols from many cultures and many periods in time seem to indicate that we have had this discussion before. We have found the wisdom only to lose its meaning to the evolution of civilization and the march of time.

Is there one way or one human nature? No. Modern genetics has begun to make it clear that while we are wired a certain way we are not doomed by our genes. But if I don’t know who I am, I am more likely to try and emulate or become like some standard. Eventually we are either overcome by the mythic ideal that appeals to our nature or we overcome. We risk becoming superman and then living in the presence of kryptonite or iron man speculating on ego or flash trying to relive the past and manage past present and future events. There are certainly not 7 billion different types of human. Life is simpler than that. But there also is not just one way. So what is the map? What does the journey look like? Can we visualize where we are and where we are going? Or do we only make sense of it once we get there?

This path of self-discovery was and still is a fuel that continues to breathe understanding into a complicated world for me.

As it does a pattern emerges that makes simplicity the form that all complexity and chaos is made from. Scholars have been writing about this in the East and the West for thousands of years. The ancient symbol for trade, The Caduceus seemed to hint at a pattern that is now born-out by modern science.  So if the maxim in my teens was “if it is to be it is up to me” and in my 20and 30’s “life is difficult” then now it is this “life is simple.”

It’s not as simple as we might like but its difficulty comes forth from simple distortions in our understanding of how we trade one currency for another. How we trade time for money, money for influence, influence for health and health for time are wired into us differently. Knowing how we are wired and accepting the validity of each of us is another step in eliminating the babble that makes understanding and financial evolution so slow and chaotic.

In our experience and experiments we have identified 7 natures and 3 motivations that combine to create 21 different types.

There are 23 chromosomes. Two for sex and 21 for type. You and I are wired to allow one of these types to dominate if we let it.

Do you know your type? Would it make a difference if you did? Would it explain your behavior and make sense out of seemingly senseless choices? Could you leverage the knowledge of who you are at a deeper level? Or avoid creating more debt and depression by continuing to deny your nature? Could you speak to yourself and others with compassion and understanding more accurately? Could you love others more deeply for who they are and accept a wider array of people into your life to help you and to be helped by you? Could you accept yourself for who you are and become a better version of yourself?

“Know Thyself” paired with “Deny Thyself” may lead us to the “Middle Way.” What I have found in my journey is that these stereotypes do not belong to male or female, black or white, rich or poor. Instead we are all traveling through a series of life experiences that are colored as much by our initial hardware as they are by the software we choose to download.

I wouldn’t change a thing about the past. My mom eventually went to work at SU and my brother graduated from there. I love cheering on the home team and suffer when they lose and celebrate when they win. I met my wife and the rest of my life at RIT. I am a man with wounds, but they are scars I share and take pride in how they were earned.

Armed with more intimate knowledge about myself and others I am prepared to use my leverage to make the world a better place by helping people discover their nature. And it’s not to avoid battles and scars but to embrace and learn from them.

Life is difficult, but accepting difficulty is easier when we realize that it comes from simplicity.