When people come to see us at Blue Sky for the first time we appreciate that it takes a lot of gumption for prospective clients to walk through the door and share their lives with us.
The end of this week, marks the completion of two weeks work experience here at Blue Sky for a 15 year old boy called Hugo, from Bournemouth School. His feedback made me think about how most of us start off in life with eternal optimism but gradually, over the years, we accumulate layers of ‘baggage’ that begin to shape our opinions and, ultimately, our behaviours.
Hugo has shadowed myself, members of the team, attended his first ever Board Meeting, interviewed a range of employees, completed a digital online financial education programme, had to answer a number of questions and respond to hypotheses which were given to him at the start of his two week trial. He has learned so much but during his various debriefs, there has been a recurring theme relating to his client experiences…
“Whenever we met with a couple there was always one person who was much more cautious than the other.”
A good observation and, of course, such thinking can be an important dynamic in a relationship. Regardless of whether we are talking about financial or non-financial matters, our behaviours and actions tend to be dictated by those who are most risk averse. It’s difficult to take most people out of their comfort zones. Ask anyone who is scared of flying?
Hugo also noticed that the more money someone had, the more cautious they tended to be. Understandable to a large extent, but being cautious doesn’t mean that people shouldn’t use the various tax allowances made available by the Government. The fear around money so often means that many pay more tax than they need to.
It is fair to say that we see many new clients who have cautious dispositions but are confused as to what risk really means. They associate financial advice with investing and the possibilities of losing money on the stock-market.
Our mantra is “don’t plan to invest, invest in planning”.
Planning, in our experience, tends to reduce peoples’ risk, removes fear and allows them to be excited about the future.
Let me share an example with you:
The couple who had accumulated a portfolio of several hundred thousand pounds but had no guaranteed pension income other than the state pension.
They were recently retired but were quite frugal and were scared of losing their capital. He still did some part-time work, not because he enjoyed it but because they needed to top-up their income! They had worked hard all their lives but found themselves compromising their lifestyle. I think it’s probably an understatement to say they were careful! They had turned down lots of opportunities and an element of fear underpinned how they lived their lives. Every bit of negative news-flow firmly entrenched their concerns.
Comprehensive financial planning allowed them to view their position from a wider perspective and we gradually weaned them off the fear drugs. As they began to resonate with what was possible we set about planning how they could reap the rewards of all their hard work over the years. This was the exciting bit.
…move on 18 months since they first came to see us
Last month, we received a postcard from the couple who were holidaying in the Caribbean and an extract said
“well you told us to go ahead and enjoy ourselves”!
The financial services sector gets blamed for lots of things but I don’t mind getting blamed for this one!
Don’t let fear lead to inertia!
I mentioned above that Hugo has completed a digital online financial education programme. As many of you will know, we are working with Daniel Britton and the Personal Finance Academy to promote financial education with young people.
The pilot version of the online Personal Finance course has just been released and we have 10 free memberships to give away to readers of the blog.
If you know a young person aged 15 – 21 and would like them to benefit from this innovative online course please visit Personal Finance Academy
Daniel would also appreciate any feedback on the programme.