11 Sep 2019
Why people defer financial planning
I think we all agree there will less State intervention in the future. There is greater focus to provide for ourselves and to make our own future provision.
With this in mind - should we be planning our financial future to create greater levels of security and certainty?
We know that delaying a decision probably means we are less likely to achieve our financial goals.
This made me consider reasons why people put off their financial planning and what we can do to support them to act now.
1. People don’t know where to look for information
The reality is that all the information clients need is available at their fingertips. Think about all the sources of financial information available. The key is they are unsure of the validity of this information and whether it can be trusted.
2. People find it complicated
In my experience, our role is to help simplify the complicated and make financial planning easier to understand.
Anyone who finds financial planning too complicated should still take action. By not doing so, they are condemning themselves to a harder life than they need to.
3. People just want quick results
This is a serious problem. The media often suggests the solution to our financial woes is some sort of quick fix. The reality is that it is extremely rare for people to get rich quickly. Most people who have ‘made it’ got there extremely slowly.
4. People just want someone to tell them what to do
I see this a lot. If you are fortunate to have money to start with then this is probably a viable option. We often act for clients that are capable of creating their own financial plans and working out their own finances. Most of them come to us because they value their time and want to focus on different stuff. They prefer to pay us to ensure that they remain secure and they avoid costly mistakes.
5. People cannot afford it
Unfortunately, this is a reality of the modern world. Although we earn more money than previous generations, modern life still seems to suck all our resources and money.
The reality is that anyone can afford it; they just need to understand their priorities. Financial planning is about prioritising spending and working out how to pay for what is most important.
6. People cannot see past the short-term
This is a genuine difficulty for many people. It is hard to think past your immediate life, especially 20 or 30 years into the future. Financial planning is about time travel, not in a Doctor Who sense, but visualising how you want your life to be in the future. Then building a plan backwards from there, to create a plan of action to make that dream a reality.
7. People can’t trust financial institutions
There is an understandable cynicism with the Financial Services industry. The 2008 credit crunch undermined client trust. There is a perception that banks, pension providers and financial advisers put their short-term interests and profits before clients. I do not want this to hold back your own financial planning.
Financial planning can help you identify the issues which affect you most and create a plan, putting knowledge into action, since we know that a delay probably means you are less likely to achieve your financial goals.