If your financial advisor ever uses the word “neuroeconomics,” fire him… immediately…

It’s another word for financial “behavioral coaching.” In a recent Time Money article, advisor Bridget Mermel explained her most important advisory role: to manipulate her clients’ behavior (i.e., to keep them from selling low in a panic). She uses a protocol she adapted for emergency trauma personnel.

When her clients are freaked out, she tries to:

  • Listen, show empathy, and be calm.

  • Ask if the client has done this before. How’d it work out?

  • Explore other possibilities. Help the clients think through alternatives. If they sell now, when are they going to get back in? Where are they going to invest the proceeds?

  • Buy time. If appropriate, make nonbinding agreements that they won’t sell until a specific date.

  • Identify people in the clients’ lives they can enlist for support.

  Now, while we have no doubt Bridget has good intentions… we can’t believe people pay her for this. She’s right to note the crucial importance of an investor’s psychology in making trading decisions. But where she errs is in trying to control this…

Think of what happens to people in a real-life emergency. If you’re trapped in a burning building, reason goes out the window at the first whiff of black smoke. Trying to reason with someone in this condition is useless. The same is true in a panicked financial situation.

That’s why the Palm Beach Research Group approach to safe investing eliminates the psychological element. We employ trailing stop losses on our positions to prevent someone’s emotions from ruining their investment portfolio.

It’s simple: When your stop gets triggered, you sell. Period. Preservation of capital is always rule No. 1… and trailing stops ensure this.

To learn more about how trailing stops remove irrationality and panic from your decision-making process, read our risk-management protocol, the Palm Beach Three-Legged Stool of Safety.

 These PBRG subscribers are walking away with $6,500 from us

You may remember we offered to pay our elite Infinity subscribers up to $5,000 for their best ideas. Over 130 great ideas came in. And, last week, our Infinity subscribers chose which ones were the best of the best. Here are the results:

Third Place, winning $500:

Subscriber Jon M. suggested a new PBRG program dedicated to asset protection, corporate structures, and estate planning. It would be a 360-degree, intergenerational wealth-safeguarding package.

Second Place, winning $1,000:

Subscriber John D. suggested a program designed to maximize many Americans’ largest source of retirement income: Social Security. Social Security has over 2,700 rules for claiming benefits. John wants a service to help folks navigate this process… and know when and how to claim benefits for maximum return.

First Place, winning $5,000:

Subscriber Brian M. suggested a way to “supercharge” all PBRG programs by placing them inside a limited liability company (LLC) owned by your individual retirement account (IRA).

This unique IRA setup would enable you to buy and sell stocks, sell covered calls and equity-secured puts, collect rental income on real estate owned by the LLC, and buy gold, silver, and overseas property. It’s a way to engage in all parts of the PBRG asset allocation model through a tax-advantaged IRA.

We’ve already begun researching these ideas. Look for updates on them in the future. And thank you again to our incredible subscribers… who’ve proved once again they’ve got the best brains in the savings and investment universe. All Infinity subscribers can click here for more details on the ideas inside The Community.