Pay Someone to Enforce the Discipline

When I run at the community tracks in the morning, I see many other runners. I also often see a group of people doing different exercise drills with a trainer. I didn’t ask but I suppose the participants are paying the trainer for leading the drills. I’m pretty sure they can get exercise routines off the Internet and do the same exercises on their own. Are those people foolish in paying good money for nothing?

American Express charge cards lack one feature found on similar American Express credit cards: the option to carry the balance and pay over time. Charge cards must be paid in full by the statement due date with no exceptions. Although the option to extend payments over time (with interest) isn’t that great, it’s still an option. Yet the charge cards have an annual fee and the credit cards don’t; all other benefits are identical. Are charge card customers dumb when they pay more for less?

In either case I see people are paying someone to enforce the discipline. They are not foolish, but actually smart.

If the alternative to not paying for the exercise class is not exercising as often, the fee for the class is a small price to pay. We all have good intentions but we don’t always act on them. If it takes paying for a class to get someone exercise more often, so be it.

If the alternative to paying an annual fee for a charge card is sometimes not paying off the credit card balance in full, the annual fee can be far less than the interest incurred. Everybody knows carrying a balance on credit cards is bad, but millions of people do it. They are much better off using a charge card or debit card. Between a charge card and a debit card, a charge card has better rewards and better protection than a debit card. The extra rewards and protection can be more valuable than the annual fee.

Recently a friend asked me about investing. He has his money managed by an advisor but he’s thinking of investing some money on his own through an online broker. He told me he didn’t know where to start. Rather than sending him a list of books to read or pointing out a few good funds to build a portfolio, I gave him the name of an advisor I trust. I think he’s better off paying an advisor than trying to do it himself.

He’s already paying an advisor. I don’t know anything about his advisor but by sheer statistics I would guess his advisor is both expensive and underperforming. It’ll be so much easier to have another advisor put the investments on the right tracks than having him sort out the mess himself when he doesn’t know much about investing yet.

If I send him a list of books, will he read them? If he reads them, how long will it take? Will he understand enough to put together a suitable portfolio that performs to within 0.5% of the return from a portfolio a good advisor builds for him? I have my doubts in all these questions.

Using an advisor costs money. So does messing with his money on his own.

Knowing that the enemy is often ourselves, paying someone to enforce the discipline is not bad at all.