The“Financial Overwhelm Loop” Revealed As you grow up and get through high school and then possibly into university, college or directly into the workforce, you become acutely aware of all the financial things out in the world you know nothing about. You begin to hear about the stock market, registered accounts, mutual funds, real estate, paying taxes, corporations, stock brokers, cash flow, contribution matching, market timing, diversification, dollar-cost-averaging . . . the list is endless. Predictably, since you’ve never been taught any of these things, they cause you anxiety and concern, because you have no idea what they are, or what you should be doing. As you accumulate some money, you have a sense that you should be doing something with that money, but you just don’t know what that should be. You begin to feel a sense of overwhelm at trying to figure out what to do. There don’t seem to be any other logical solutions. Your parents don’t seem to be able to offer any intelligent advice, and your friends don’t seem to understand things any more than you do .. so you do what most people do in this situation, and turn to a financial advisor to ask for some help. And then it begins. You feel a sense of relief as you hand your responsibilities over to someone who is an “expert”, that will take care of your money. When you meet with them, they sound very smart, and they gain your confidence that you’ve selected the right person. Of course, since you don’t know to ask, they don’t discuss their compensation or how they are going to profit from working with you. Rarely does the nature of your relationship with them get discussed in detail. All you know is that they’re going to manage your money, and grow it so that you can enjoy a wonderful retirement. You then essentially ignore your financial situation, trusting it to someone else. You don’t educate yourself, or learn about new products and services coming out in the marketplace. You don’t pay a lot of attention to the fundamentals of the markets. In fact, you can’t, because you wouldn’t know where to start. But you carry on with your career or your business, your family, and all the other priorities you have. Besides, you’ve got enough going on in your life, and the last thing you need to do is try and become a financial expert. You’ve never been good with numbers, and it’s just not your skill set. You do what you need to do, and your advisor manages your money, and everyone lives happily ever after. Right? Unfortunately, most investors find out at some point that while this fairy tale is easy to believe, it rarely comes true. Eventually, out of nowhere, some kind of financial problem occurs. There’s a meltdown in the stock market, or interest rates are increased without warning, or your portfolio takes a hit for some reason that you’re not clear on. And here you are, looking to your advisor for help and reassurance. And what do they tell you? ‘Don’t worry’, they say. ‘Now is not the time to panic. We’re in for the long haul, and now is a terrible time to pull out’. They tell you that they think the market’s about to come back, and try to calm you down. So here you are, feeling trapped, because you don’t have any idea how to interpret what’s going on, and blindly relying on someone you hope knows what they’re doing. You’re back into ‘overwhelm’ because you don’t know whether you should fire your advisor, or if you should stick with it ‘for the long run’. And this vicious circle continues over and over – blindly trusting others with your money, and then failing to become educated so that you can make better decisions in the future. For many investors, this cycle repeats itself for their entire lifetime. Some investors switch advisors during a downturn, while others stick with them, hoping that at some point things will turn around. Now, don’t get me wrong – as I’ll outline in the next chapter, I don’t think that the entire financial industry is out to get you, or that you can’t trust any financial advisor. While there are definitely some serious problems in the way that the system is structured (and work against the interest of the individual investor), I do believe that most of the people in the financial sector are honest and want to help you. Unfortunately, as you’ll see, many of them don’t even know the damage they’re causing to their clients. In any case, the point you need to get right now is that no one will take better care of your money than you will. — As I said, if you can relate to what I’ve said here or you have any comments, please post them so that I can incorporate them into my book!]]>
10 Responses
Your way of delivering important information is going to be your trademark! Everyone that reads YOU will relate with your quotes …this is reality, do not change this … these will become “triggers” for people to be AWARE. I would suggest you consider the older generation (like my parents 65 and 72) that did well without knowledge or real planning but are the first to be vulnerable to this “Financial Insdustry”. I have heard the quotes and seen the fear in my mother this year as she tried to sell off her mutual funds to start an Arm’s Lenght Mortgage. The quotes that came from her FP where classic lines that you had discussed with Mr. X and you use them here in your book! Many will relate… you are going to cause a “revolution” that is well over due and I look forward to promoting it! My intention for 2009 has been about building “trust” and taking “action”. Your book is going to back up my intention in 2010 and for years to come! Thank you for your commitment to making a difference!
Sincerely, Diane Leahy
Greg, I think you have really hit the nail on the head. While most of it I was able to predict (due to you and Harv, and all the others I have been reading and listening to over the last four years teaching me lots) this is the perfect thing for someone who is just starting the journey. If I recall, that is the market you are trying to help with this particular publication. I have no doubt that the rest of the book will contain lots I have not heard or don’t remember and I am looking forward to reading it.
I think the way you write it from the point of view of the novice, uneducated investor is brilliant and I think people will really identify with you and (as I have done) will quickly trust you and your information. It is very clear that you have not forgotten what it was like when you started and that authenticity will really appeal to your audience.
I look forward to reading more.
Have a great day.
Rene.
My personal belief is that the main reason we have gotten ourselves into such dire straits is because we have stopped trusting ourselves to make our own financial decisions. We have gotten lulled into turning our power over to someone else; be it an advisor, the FDA, our doctors, the “government”. Since we havent’ exercised our powers, they become like anything else not exercised: flaccid, lazy and dull.
If you can also speak to the generation who grew up with everything being “fixed” for them and somehow get them to realize that they need to wake up and take care of business themselves, you will be doing the future a wonderful service.
There is not much that you say that does not resonate with me, but what is the next step? Where do we go to begin learning? Are you going to have a 5 Day Experience or something like it this year?
Hey Chad;
We don’t have a 5 Day scheduled for the winter in 2010. The feedback on the SimpleWealth model continues to be really positive, so the goal is to build out a fundamentals program that gives people the basic starting point. From there, they can then go into specific strategies and niches, but what I find is most people are missing the fundamentals and without those, it doesn’t matter what strategies you learn .. they’ll never work.
We’re holding a new event called Money Attraction 2.0 in February for Canadians, as well as RRSP Secrets. I’ll post about them on the blog here when we launch them to the public, which should be in the next couple to three weeks!
Put me at the front of the line to buy your book when it comes out. Nicely said.
I just received another email (from a swarm of investment subcriptions I receive daily) with the following subject title promise:
“How to turn $2,000 into $800,000 in 5 days”
And this is from a fairly reputable investment advice column! Unbelievable!!!
Why do people market like this? It is because so many are so desperate to have somebody tell them a short cut to riches rather than learn and earn the skills to empower themselves. It would be funny if it wasn’t so often tragic.
As Keith would say too many [average] people are in love with the effect while not enough people are willing to commit to the cause.
I am looking forward to your book as another important light to support the cause of helping people rise above ‘average’ create their own financial independence.
Keep it up, Greg!
I like number 9 it is the first to catch the eye but I like the lettering of formula from number 1 however calling any program "Authority Formula" would not be my first choice as it excludes many potential seekers of knowledge what makes sense to me it to be both inclusive and exclusive__and knowledgeable ie a knowledge broker or in your words an authority. One should have a strong title and look but have an approachable feeling and touch to welcome the broadest possible base to work with. I could not suggest another title unless I knew what you were teaching, instructing on or trying to convey as instructional material.
I like number 9 it is the first to catch the eye but I like the lettering of formula from number 1 however calling any program “Authority Formula” would not be my first choice as it excludes many potential seekers of knowledge what makes sense to me it to be both inclusive and exclusive__and knowledgeable ie a knowledge broker or in your words an authority. One should have a strong title and look but have an approachable feeling and touch to welcome the broadest possible base to work with. I could not suggest another title unless I knew what you were teaching, instructing on or trying to convey as instructional material.
Wiley & Sons and you will have a big winner on your hands! Your unique message will resonate with a huge audience. Your style and presentation are clear and painless to read and absorb.
Today’s younger generations do not understand what is happening around them for they are not educated, nor do they realize how to take reality and apply it to their individual situations. And as a nation we truly have been “dumbed-down”, and your work is critical in offering pragmatic knowledge and information. I am looking forward to your publication date……when is it?
Good luck and thanks for your dedication to assisting those of us who appreciate your fine writing.
Wiley & Sons and you will have a big winner on your hands! Your unique message will resonate with a huge audience. Your style and presentation are clear and painless to read and absorb.
Today’s younger generations do not understand what is happening around them for they are not educated, nor do they realize how to take reality and apply it to their individual situations. And as a nation we truly have been “dumbed-down”, and your work is critical in offering pragmatic knowledge and information. I am looking forward to your publication date……when is it?
Good luck and thanks for your dedication to assisting those of us who appreciate your fine writing.