Confidence is generally described as a state of being certain, be it that your prediction, hypothesis or chosen course of action is best.
So how confident are you around your financial future?
- Are you the person who is pretty confident because you have a simple straightforward approach and don’t wish to deviate from your long held points of view?
- Or are you the sort of person who is confused by all the terminology? You want to plan but don’t know what to do for the best.
- Perhaps, you are the type of person who is so hell bent on accumulating and saving money that you can’t bring yourself to spend some of it?
- Are you the one who just keeps on working regardless, in the hope that one day it will all come out in the wash?
- Or are you the person who has accumulated all these policies, investments and pension plans, yet have no real emotional connection to what it means to your future.
You may be none of these and possibly one of a small minority who have embarked upon comprehensive planning. Apparently this is limited to just 4% of the population. If you are in this small minority, then hats off to you.
We are all unique of course. We are a product of our upbringing and experiences, which ultimately shapes our outlook and formulates our views. If we have had little exposure to financial matters when we were young, then it should be no surprise that many of us find it hard to grapple with what we should and shouldn’t be doing with our money.
When meeting new clients, we often recognise a fear around money. Concerns about whether they are doing the right thing, worries about how best to manage their assets, uncertainties in how to interpret changing rules and doubts over whether they are missing out on opportunities. All this can lead to sleepless nights but, for most, inertia rules and a ‘glass half empty’ attitude manifests itself.
When, as financial planners, we overcome these negative emotions and show our clients the way forward, there is a sea-change in attitude. It is one of empowerment, which leads, in turn, to increased confidence and feelings of control. A much happier existence all round!
Confidence is the key to our behaviours. If we don’t have confidence then it impacts on many levels.
I was reminded of this earlier this week when I saw an existing client who, only 2-3 years ago, was adamant that he would stick to the course of action he had formulated in his mind for many years. He was tied to conventional wisdom and had everything mapped out. Great, you might think, but his plan was limited by what he knew. He was also a bit of a worrier and became a slave to his predetermined plan.
Changes, in both pension rules and his personal situation, finally saw him submit to my clamour for him to embark upon some scenario planning. Guess what? He began to realise that he’d been too rigid in his thinking and this had created a type of stress by itself. If he veered slightly off the plan, it was a major issue. He’d been inflexible and unable to adapt. As a result he was overly cautious.
Once we showed him what was possible, he couldn’t quite believe it. This wasn’t him. I’d got my figures wrong!… “Are you telling me that I could have this much money and this much income when I retire and we can choose where best to draw money from, when I need it?”
For a while, he worried that he had nothing to worry about!
Moving onto the present and the meeting this week; he’s now looking bronzed, healthy and relaxed. He’s retired. His glass is now half full. He no longer panics when he hears any negative news flow and doesn’t listen any longer when people tell him “what you want to do is…”.
His family thinks he’s lost the plot at times for he’s not as prudent as he was. He’s more relaxed about money. He’s spending significantly more on holidays and planning new experiences all the time.
He has the one thing that many people don’t have and that’s confidence. Not arrogance or misplaced self-belief but confidence that he has a plan. He has a strategy, which ensures that he can spend money without guilt or fear. A strategy that is flexible and adaptable. Confidence that, no matter what, he won’t run out of money. He’s excited about the future.
Without understanding what was possible he couldn’t see the bigger picture.