The rise of TV streaming services means you can access thousands of shows and films at the touch of a button. Despite this, you might find it harder than ever to decide what to watch.
This is a common experience and a prime example of “decision paralysis” – being unable to make a decision due to an overwhelming number of options.
What’s more, decision paralysis doesn’t just apply when deciding what to watch on TV. Your clients could face decision paralysis when it comes to their finances, and in some cases, their inability to make choices might mean it’s more difficult to reach their goals.
As independent financial planners with whole of market access, we can help them overcome this psychological block and make proactive decisions to grow their wealth and achieve their dream lifestyle.
Read on to learn more.
A growing number of investment options could overwhelm your clients
Building an investment portfolio could help your clients grow their wealth over time, but it may be getting harder for them to decide where to invest as the number of choices grows.
Indeed, according to Visual Capitalist, there were 31,470 managed investment products available in 2002.
By 2023, this had increased to 742,715, and predictions suggest that there could be more than 1 million options available by 2031.
As a result, your clients may be overwhelmed by the idea of investing. Indeed, the Visual Capitalist reports that 26% of people are uncomfortable making investment decisions due to the range of options.
Your clients may be equally intimidated by choice when searching for a savings account. For example, there are four different types of adult ISA available, each with their own specific rules to understand.
Savers may also need to choose between easy access and fixed-rate options and compare the interest rates on countless accounts.
Consequently, your clients could easily suffer from decision paralysis when trying to make choices about the best ways to build and hold wealth.
Here are three ways we could help them overcome this.
3 ways we could help your clients overcome decision paralysis
1. Determining their financial goals
Discussing their unique financial goals with us could help your clients overcome decision paralysis. Often, knowing what their aims are could narrow down their choices.
For instance, if they need to build an emergency fund, they’ll likely want to consider a cash savings account that gives them easy access to their wealth.
Alternatively, if they want to build wealth for retirement, we can explore investment options with them. When we discuss their goals, we will determine what kind of lifestyle they want and what this might cost.
Using this information, we can see what level of growth they need to achieve, and what kind of investments might be suitable. We’ll also discuss the level of risk they want to adopt and focus on products that align with their wishes.
These discussions about goals could limit the number of suitable options and narrow the focus for clients, giving them the confidence to make informed decisions.
2. Explaining financial concepts in clear terms
It could be even harder for clients to make decisions about their finances if they lack knowledge in certain areas. For example, they may not fully understand how specific investment products work, or how much tax relief they can receive on their pension contributions.
One of the main benefits of working with a financial planner is that we can explain these complex financial concepts in clear terms that your clients can easily understand.
As a result, they can make informed decisions and fully consider the implications of any choices they make.
3. Providing reassurance during periods of uncertainty
Periods of uncertainty could increase decision paralysis by putting your clients under pressure.
Take the recent Budget announcement, for example. In the lead up to the Budget, there was much speculation about what changes the chancellor would announce.
As such, your clients may have been wondering if they needed to adjust their financial plan beforehand, or what they should do now that they know which taxes will change. Fear of making the “wrong” decision in response to these new developments could leave your clients feeling paralysed.
The same is true of a period of market volatility when clients may see the value of their investment portfolio fall. Should they sell investments now to avoid further losses, or is it best to wait until markets recover? Would their wealth be safer in a cash savings account instead?
Additionally, the apprehension that your clients might feel during a period of uncertainty could add to the stress of decision-making.
Fortunately, we can support them here by acting as an impartial sounding board. We will help your clients drown out any “noise” from the media and focus on their own financial plan and unique goals. We’ll also explain clearly how any changes could affect them now and in the future.
By offering reassurance, we can guide your clients towards rational decisions that align with their long-term aims.
Get in touch
If your clients suffer from decision paralysis, we can boost their confidence by offering bespoke guidance.
They can contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2024 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
