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BAM Intelligence

A View From the Top on Preventing Financial Valleys

I love climbing in the mountains and try to do it as often as possible. Four hours north of my home sits one of my favorite places to climb, the Teton Range. It’s a beautiful area, one of the most striking mountain ranges in the continental United States.

My favorite peak in this range is the Grand Teton, and I try to climb it once or twice a year. This summer, I noticed something about my preclimbing routine. Before I go, I find and read recent climbing accident reports. I look for reports from accidents in the Tetons specifically, and it’s even better if they’re on the same route as the one I plan to climb.

I shared my newly discovered habit with friends, and they all wondered why I would want to review accident reports. “That’s weird,” they said, “Why would you do that before you go?” Wasn’t I tempting fate?

When I started reading these reports, I judged climbers for making “stupid” mistakes. But over time, I started reading them to understand instead of to judge. This simple switch in perspective has helped me avoid specific mistakes on multiple climbs. As a result, these accident reports have become invaluable.

Some climbing accidents involve random risk, things we might refer to as irreducible risk. There’s always a certain amount of risk left over, even after you have thought of everything else. It’s just part of living, and climbing comes with varying levels of this risk. But a whole bunch of accident reports include stories about people who, in hindsight, could have avoided their mistakes. Reading these reports helps me identify things I might otherwise have done simply because I didn’t know better.

For instance, on this last trip, I was bringing my daughter with me, so I felt a heightened awareness about risk. One report indicated we shouldn’t descend via a particular gully even though it looked quicker on the map. During the winter, it’s full of snow and a faster path down the mountain. But during the summer, it’s wet and dangerous because of a waterfall that forms.

The mistake was understandable. One of the climbers in the report took this route during winter. To the best of his knowledge, there was no reason his group couldn’t descend via the gully in summer, too. Because of this report, I avoided making the same mistake. Imagine if I had been climbing with someone who had also made a similar winter descent. Without that report, I wouldn’t know to avoid the gully during the summer.

I will continue to make mistakes, both in climbing and in life. Other people will continue to make mistakes, too. Luckily, there are plenty of “accident reports” we can read to learn from those mistakes.

I think about this opportunity often when I hear people predict with complete confidence that they would never be so stupid as to run up a lot of credit card debt. They would never be so stupid as to take out an interest-only mortgage. They would never be so stupid as to trust the guy guaranteeing double-digit returns — no matter what the markets have done historically. We forget that even the smartest people can make mistakes.

The really smart people, however, understand this reality and seek out their own accident reports to help them avoid future mistakes. Sometimes, it means reviewing our past behavior to see why we did what we did and how we can avoid similar mistakes in the future. Whatever the process, it will require humility. That seems less weird, and more wise, than sticking with the story that we are too smart ever to make a mistake.

This commentary originally appeared September 15 on NYTimes.com

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

© 2015, The BAM ALLIANCE

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Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. His simple but meaningful sketches served as the foundation for his first book, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.”

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