With all the attention on the bad practices of the banking and financial services industry, it was quite a change for me this week when I spoke at the Barron’s conference in Sydney. Barron’s is a US-based financial magazine that has entered the Australian market with the purpose of creating greater focus on “the top 1% of advisers” rather than, as they put it, the royal commission focusing on the “bottom 1%”.

When asked to speak, I had no hesitation. However, as seems to be my pattern, I have major regrets around 24 hours before the event. I generally enjoy public speaking – especially on the topic of client engagement and financial planning – but it doesn’t stop me feeling a little nervous, and it always seems to be 24 hours before. Subconsciously, there is obviously concern about making a fool of myself.

There is no logic to my fear – and that’s the point. As soon as I become more logical, the anxiety dissipates completely. Over the years, I have learned to recognise when it’s happening and have developed two simple techniques to deal with it.

The first is to simulate the experience. I pretend it’s a movie and watch myself walking up to the stage, turning to face the audience, beginning to speak and as I move more and more into my topic, speaking to each person in the audience as if it’s a one-on-one discussion.

The second technique I use is to think about the worst thing that could possibly happen: I could forget what I wanted to say, the technology could fail completely, or I could say something ridiculous. By going through this process I come out the other end feeling not only relaxed, but looking forward to getting up there.

We’re mostly unrealistic

The acronym F.E.A.R. stands for False Evidence Appearing Real, and the best way to prove that the “evidence” is false is to simulate the possible futures, including the worst case. Human beings naturally begin solving problems when they are addressed directly.

Exactly the same process occurs around money. Whether it’s a fall in the stock market, a loss of a job, or any other potential financial concern, the worst thing to do is to worry about it at a high level. There’s no logic in just worrying about something and getting anxious. It doesn’t help.

Having said that, to some extent I’m grateful that there are so many people out there that worry about money. Without that innate concern, we’d have no role to play.

New clients especially, worry about lots of things. There are often real issues but sometimes, they worry about what they are worried about. They often ask: “Is this a common problem? or “Do other people also worry about this?”

Glass half full, or empty?

One of the American speakers at the event had an exercise that apparently identifies people as either optimists or pessimists. The optimists are the “glass half full” people and the pessimists are “glass half empty” people. Interestingly enough, when the speaker asked for a show of hands for those that considered themselves pessimists, not one hand was raised. It’s not “cool” to be regarded as a pessimist. But the truth is, one is not better than the other, and both have blind spots.

The optimists can be overly confident about the future and therefore unrealistic about the assumptions being made. As the pessimists would say, the optimists may get a nasty surprise sometime in the future.

Pessimists on the other hand could be equally unrealistic in their assumptions, resulting in a life of unnecessary frugality.

These outlooks come from various sources – genetic, wiring, and learned behaviour. They’re mostly not a choice but can still be very limiting.

It creates a sense of freedom

The ultimate purpose of course is to be free at both a practical and psychological level to live the life that you most want. In order to achieve this level of freedom in an unpredictable future, simulation and scenario planning can have a significant impact.

Just as I simulate my presentation and allow myself to deal with the unexpected, it is even more powerful to simulate the potential impact of external factors on cash flows. It is a wonderful way to alleviate anxiety.

When doing so, it’s worth contemplating all the possible risks including worst case, the potential implications should they occur, and how these risks can be reduced or avoided.

We all wired differently – some optimists, others more pessimistic. Neither is perfect and each can cause problems that can be neutralised with some simple techniques. Being aware of your default outlook, and then simulating the opposite, creates a sense of freedom that allows for a real enjoyment of an experience. And as is often the case, I was on a real high after the presentation. None of my concerns became reality.