Two-Thirds of Americans Say Their Financial Planning Needs Improvement
35% of Americans work with a financial advisor. They are happier and more confident in their financial future. They sleep better at night knowing a financial professional manages their money.
Studies show that working with a financial advisor has a clear value. Unfortunately, too many people undermine their financial future by not seeking professional advice.
Understanding Good Financial Decisions
What makes a good financial decision? What ingredients do we need to make an optimal decision? There are three key ingredients:
• Experience -- we know how to do this, we've done it before - the how
• Expertise -- we know why we do this, what is the purpose, and its consequences
• Feedback -- we have insights into what will come out of our decisions, and we can correct them if necessary
With financial illiteracy around 50% in the United States, many people lack these crucial ingredients. Often, they don't seek help because they don't realize they have a problem, despite daily reminders.
Finance for regular people has many questions and uncertainties. Acquiring the necessary expertise and experience doesn't come easy and requires considerable conscious effort. And with no action, there is no feedback.
There is good news.
Most individuals can borrow the experience and expertise from a financial advisor, someone who went through extensive training and licensing. The advisor can share the experience and expertise needed. And they've seen many clients in similar situations, and they can share their feedback and best practices.
A nudge to take action: Meet your future self
Imagine having a conversation with your future self. Extend yourself 10 or 20 years in the future, and summon that future self for a fireside chat.
For the most part, technology attempts to make our lives easier to navigate by giving us access to tools that provide valuable insights.
Here is one such tool: a future self-chatbot.
A team of researchers from MIT, Harvard, UCLA, and KASIKORN Labs created a chatbot that allows you to talk to a future version of yourself.
They found out that talking to a future self reduces anxiety, and negative emotions, and increases future self-continuity.
We age continuously. The time spent in the past becomes longer than the future ahead of us, and our regrets pile up. In the past that we leave behind we buried our lost opportunities, a lot of "what-ifs" that we call regrets.
There is a cost of inaction represented by our regrets. The lost opportunities we did not act upon weigh three times heavier on ourselves than the ones we took a chance at, even if we failed. In other words, they sabotage our future peace of mind every day.
Care to guess what is one of the most common regrets?
Yes, is the regret that they did not educate themselves financially earlier in life. Many people I talk to share this regret. For some, it is too late to do something, and they'll have to make peace with it. For some, there is still time to correct it.
Take a moment. Have an imaginary chat with your future self. How would the conversation go? What do you think that your future self will tell you to start today?
Or, use the chatbot.
***
Links used in the post:
1. https://www.prnewswire.com/news-releases/two-thirds-of-americans-say-their-financial-planning-needs-improvement-301881539.html#:~:text=MILWAUKEE%2C%20July%2024%2C%202023%20%2F,Mutual's%202023%20Planning%20%26%20Progress%20Study.
2. https://techxplore.com/news/2024-06-future-chatbot-users-glimpse-life.html
3. https://arxiv.org/pdf/2405.12514
See thrivent.com/social for important disclosures.
/PRNewswire/ -- Americans say their financial planning needs improvement and that having a financial advisor boosts confidence, yet only 37% work with one...