The Slippery Slope of Rationalization

At a financial planners’ conference I attended last week, a dinner conversation turned to the seedy side of the industry. Namely, we were discussing the bad apples who spoil the whole bunch: those who steal their clients’ money. Ask anyone with experience in defending or prosecuting these liars, and almost to a person they will say the culprit “thought” they were acting in their clients’ best interests, or at least started out that way. Criminals such as Al Capone reputedly have said they intended to do what was best for those they had murdered, by putting them out of their misery.

In the financial world, a bad guy or gal typically crosses the line after they get in a bind with a promise or debt they cannot fulfill. They intend to “borrow” client funds, sometimes without telling them, and sometimes by offering an “investment” in a related entity which pays an attractive, but usually not exorbitant, return. They “intend” to pay it back as soon as all the chips fall back in line. But the Peter-robbing to pay Paul has begun, and as complication grows to cover the lies and promises, a Ponzi scheme is born.

Perhaps these headline-grabbers attract our attention because there is something about rationalization that strikes close to home. Maybe we rationalize a behavior that doesn’t hurt anyone but ourselves, or maybe, over time, it is the kind that rocks a relationship to its core. The clients of the criminals often state they thought their best interests were being served. They trusted the words they heard. Delivered with sincerity, they read the right intent into them. Perhaps because what was said was what they wanted to hear, they did not question whether the actions were matching the words.

Maybe we have been on the receiving end of a rationalIzation that sounded good, and chose to ignore that inner voice that told us to second guess. This is its own form of rationalization, too. Both parties want to ride the denial carousel, because getting on or off involves short-term pain or conflict. That foregone pain, though, simply compounds, whether financially, like interest on too much debt, physically, like ill health practices, or emotionally, like small slights leading to anxiety, depression, or anger. The longer we live in deferral and denial, the greater the imminent pain, and the harder it is to stop.

Only those with courage will stop the rationalization before it begins, and stand up to their own consequences. It takes similar courage to call the duplicity on the carpet the moment the inner voice discovers it and whispers in our ear. If you ever find yourself on one end or the other, remember, the degree of pain to call it, and change now, may pale in comparison to the pain you will save yourself later.

Holly Donaldson

Holly Donaldson, CFP® runs an hourly and fee-for-service financial planning practice virtually from her Tampa Bay, Florida office. She also works with clients throughout the U.S. (except Texas) interested in retirement and tax planning advice without product sales or investment management. Holly is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch."

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