Skeptical curiosity

While sipping my bulletproof coffee one morning, an ad on the news caught my attention. A large money management firm was promoting its guide, 6 Pitfalls of Funds. The verbiage encouraged viewers to download it, appealing to those with a portfolios in excess of $500,000 and indicating that it might be time to “graduate to a better strategy.”

Full disclosure. I didn’t want to provide my contact information in order to get access to the guide so I haven’t read it.

In the moment, however, my brain was screaming, “No! Don’t fall for it. This seems so misleading.” But this internal sputtering was not useful except for causing agitation.

I realized I needed to transform my chaotic reactions to coherence. In a moment of synchronicity, a concept I had read about recently came back to me – skeptical curiosity.

I’d describe skeptical curiosity as an attitude you can adopt to help assess the value or validity of anything you read, see or hear. Here’s how I would apply it in this situation. I thought about what sort of questions I could ask to help me settle into objectivity and defuse my emotional reactions.

This is what I came up with.

• What is magical about $500,000? Would the alternative strategy not work for me if I had a $400,000 portfolio? If not, why not?
• Is the author referring to all mutual funds? Mutual funds aren’t a strategy. They are investment vehicles and vary greatly in their composition, costs, quality and other factors. The strategy lies in selection and how portfolios are constructed using them. Are all strategies employing mutual funds bad?
• Some mutual funds are built on years of rigorous academic research? Is that also true of the proposed strategy?
• Can the same level of broad, global diversification be achieved using this strategy as can be using passive asset-class funds as building blocks for a portfolio? Is that important?
• What are the pitfalls and risks associated with the proposed strategy?
• If portfolios in excess of $500,000 should be managed using a strategy that doesn’t include mutual funds, why do institutions with billion dollar investment portfolios invest in certain mutual funds?
• How do the advisors using each of these strategies ensure their recommendations are aligned with my financial goals?

What do you think? Are these questions you would want answers to?

Granted, as a financial advisor and advocate for evidence-based investment strategies, it’s easier for me to develop a list of questions.

What was unexpected for me was the strangely calming effect I experienced after going through the process of writing down the questions.

Skeptical curiosity is a tool you can keep in your critical thinking toolbox. This experience taught me that it can also help keep my emotions in check when objectivity is important.