32% of Americans would rather go to the DMV than work on a detailed financial plan.
Would you?
Talking with a family member this past weekend over football and food, he mentioned that he had been faced to overcome a major fear earlier that week.
The way my friend retold the harrowing tale, you would’ve thought he had dealt with a phobia like walking through a pit of snakes or giving a speech in public. However, his experience didn’t involve anything dark, slimy, or scary, rather it required him to walk into the local branch of his bank.
He proudly informed me – that he had not actually set foot inside the bank in roughly 4 years prior to that day. Instead, he utilized the institution’s mobile app for things like deposits and payments and went through the drive-thru ATM on the rare occasion he needed cash. An issue with an actual paper check required service that a call or app couldn’t provide, thus he boldly ventured into the brick-and-mortar version of a bank. Needless to say, it wasn’t his favorite experience.
“I hate actually having to go inside and talk with someone. Especially when it comes to my money. I like to keep that private.” (20 minutes later into the conversation I began to wish he had kept this private as well) However, as he droned on about waiting, ATM fees and other bank related annoyances my mind began to wander. I began to ponder why we people really don’t like talk about money.
I remember seeing a recent study that echoed my friend’s sentiment. Polled by CNote, 2000 Americans were asked about their feelings regarding their personal finances. There were asked about various activities ‘they’d rather do’ rather than addressing a financial issue. The results were both amusing and shocking.
For example:
- 26% would rather talk politics with somebody they disagree with than write a financial plan with a family member.
- 20% would rather spend an hour in jail than build a five-year financial plan
- 16% would rather sit through a steamy sex scene with their parents than tell them about their biggest financial blunder
- 27% of Americans who’d rather get stung by a bee than move your money to a new bank
- 32% of would rather go to the DMV than work on a detailed financial plan. (my personal favorite)
- 34% would rather post their most embarrassing photo of themselves on social media than post a screenshot of their account balances
- 34% would rather spend an hour in traffic than go over their money mistakes with a financial advisor
- 67% would rather drink a glass of orange juice immediately after brushing their teeth than simply check their savings balance
That fact that nearly a third would rather sit in the DMV than choose to work on a financial plan really stood out to me. Even in a non COVID-19 environment, if someone told you that they would rather spend an hour at the Department of Motor Vehicles than talk about budgeting I wouldn’t believe you.
Catherine Berman, CEO of CNote, commented on the study, “Talking about money is such a social taboo, but if we start a dialog and push through that uneasiness, we can empower people to be more proactive about their financial health, and leverage their money to not only a build a better financial future for themselves, but to also cause positive social change.”
What Berman says is so true. Additionally, 56% of those polled said they were uncomfortable talking at all about their personal finances with anyone else, financial planner or otherwise.
There are many reasons people would rather do a million things other than address their finances. Maybe it is embarrassment?
Many people, federal employees included, don’t feel confident about the direction they are headed and can’t stand facing the news. Just like going to a doctor’s office, we are nervous about what we will find out. What we find out after the fact is that the reality, health or financial, is never as bad as we thought. If the fear remains it can lead to procrastination on acting. Just like with our health, if we wait too long with our financial plans, we will eventually be sick. When that happens, the remedy is usually twice as expensive and three times has painful.
Our family upbringing also could be the cause. Many people were raised to not openly discuss taboo topics such as money. I’ve heard from clients on numerous occasions that talking about money in their house was not acceptable, nor good manners. This can be an extremely powerful force. We learn important habits from our parents, especially money habits. In those households where it was taboo to talk money, we missed out on some valuable lessons.
Why don’t people use financial advisors then? This is a topic near and dear to my heart. I’m sure the reluctance has many varied causes. However, I think the two biggest reasons people don’t talk about money with a financial advisor is lack of trust and something called the “status quo bias.”
Although the overwhelming majority of fiduciary only financial advisors in the world are fine, upstanding people with good advice to give, many Americans can only remember the crooks. Remember Bernie Madhoff? The headline grabbing thieves are tough to ignore and can erode public trust to a harmful extent. It is certainly right to be cautious with whom you get advice, but never so much that it stops you from getting the care you need. If your foot hurts, and you went to one doctor you didn’t care for, you would just seek out a second opinion, not stop your search entirely.
The other cause is something called status quo bias. Status quo bias is going with what we know, i.e. voting for the incumbent. If it’s not broke don’t fix it.
As someone that has worked with Feds for 20 plus years, I can 100% attest that status quo bias is rampant in federal community. Contrary to the private sector where job hopping is more common, many feds have worked 20 plus years in their jobs and the FERS/CSRS system is all they know. And heck, that system is a pretty good thing! I’ve heard from clients, “Why change or seek advice beyond OPM or the TSP. It’s worked so far!”
This inertia is embedded in everyone. Psychologists have studied this status quo phenomenon and the results are eye opening. Humans have such a strong preference for staying put that we would rather make a mistake standing pat than make a lesser mistake with an equivalent change.
Don’t think so? How happy are you with your doctor? Your dentist? When is the last time you looked at your FEGLI? Adjusted your TSP funds? I asked my friend at the end of his rambling if he would change banks now based on his experience. He said, “nah probably not; I’ve been there since college.” When pressed, he couldn’t give me one reason why he liked his bank other than its familiarity.
If you are one of these people that don’t like to talk money, ask yourself why.
You might want to take a lesson from Charlie Munger, Warren Buffet’s investing partner and billionaire. One of his mantras is “Always invert.” By this he means when making a decision, turn the issue on its head. Take the opposite view.
Why don’t I talk about money?
Do I need help?
What is preventing me from taking action?
You may find out that you really want financial guidance, and you are the only one getting in the way of it. As I always say, this does not mean go out and immediately hire yourself a financial advisor and it certainly does not mean go out and buy a financial product, but if you have questions that need answering, and the questions are important enough, it makes sense to confront your reluctance.
Get over your fear and do it before it hurts, or at least before you need to watch a movie with your parents.
“The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.”
Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Mission Point Planning Group and Securities America are separate companies.
