What does it mean to be a consequentialist?
I recently came upon Jaan Tallinn. He is quite remarkable. Estonian computer scientists are not common here. You could learn more about him. He claims to be a consequentialist. He is engaged in the study of existential risk and the ways to reduce it.
In his words from an interview in Edge.org,
“The reasons why I’m engaged in trying to lower the existential risks has to do with the fact that I’m a convinced consequentialist. We have to take responsibility for modeling the consequences of our actions, and then pick the actions that yield the best outcomes. Moreover, when you start thinking about—in the pallet of actions that you have—what are the things that you should pay special attention to, one argument that can be made is that you should pay attention to areas where you expect your marginal impact to be the highest. There are clearly very important issues about inequality in the world, or global warming, but I couldn’t make a significant difference in these areas.”
I have added the emphasis.
Is that not a reasonable general description of what financial advisors should bring to the table.
Modeling the consequences of existential risk like death, disability, economic reversals and aging, is not especially difficult. Just time consuming. Accepting the outcomes emotionally as well is intellectually is a bit harder but necessary. Choosing from the solution set is easier once someone sets out the range of the choice. Resource limitations will usually make some of the priority decisions.
There is a very large value to the client in doing things this way. Efficiency. Biggest bang for the smallest investment.
Risk and opportunity both exist. By efficiently dealing with risk, resources are freed for other purposes. Maybe lifestyle. Maybe security. Maybe buy a little time to do important things. Maybe opportunities.
Every client should understand existential risk. Every client should become a consequentialist. Every advisor should help them attach their consequential beliefs to efficient tools to deal with the observed conditions.
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.