YouTube recently suggested the below video to me. The beginning is a little political and there are a lot of points that could be unpacked, discussed and debated in more detail. That said, there were two key points that stood out to me as an adviser.
Firstly, he mentioned the Availability Heuristic where an individual will estimate probability based on their recall of recent events. This is a key concept for advisers to grasp, particularly with a millennial client base that has limited experience of economic downturns or life experience with illness or serious injury. This is why so often we use stories of other similar individuals to highlight the importance of sound financial advice.
Secondly, he concludes with three rules people should live by.
- Problems are inevitable
- Problems are solvable
- Solutions create new problems which can in turn be solved
If we think about the different financial "problems" people face, this could be saving for retirement, preparing for the unexpected or even simply investing regular savings efficiently. There are always solutions to these questions but they do come at some cost or cause some further flow on effect which again needs to be adequately addressed.
I think often advisers look at the initial "problem" they are solving for their clients but don't always go to the next step and prepare for the new problems that can arise from their advice. As advisers, I believe we should be thinking and planning two, three or even four steps ahead for our clients.