On Progress and Expectations

So there’s this commercial. It starts with a woman comforting those who have “put away money for retirement every month like they were supposed to, but don’t have enough money to actually retire.” She then continues saying “it’s not your fault.” Well, that’s confusing. Next she offers, for sale mind you, a trading academy program or something. What a perfect way to lose whatever you did end up saving for retirement.

As financial professionals, it is our duty to inform the public about how to invest for retirement. Unfortunately, and as second-nature as it comes for us, many don’t understand compounding investments or the risk involved in the process. It is essentially giving up something today for a few things tomorrow. That’s not a fun prospect for most but saying that their actions are not their fault and then pitching them a course to trade their way to the top is dastardly.

When it comes to softening the blow, it helps to build small habits because, as I have found in practice, no one wants the cold hard truth served in one course. Those who are most in need of financial counseling are those that are most illiterate and cannot withstand it all at once. That is why the process of investing for the future needs to be easy at first and include small steps like setting aside $10 a paycheck to get the ball rolling. It sounds irresponsible and counter-intuitive, yet small changes create small victories.

Setting expectations lower may help encourage rookies to increase their contributions and become more interested. The task of climbing a mountain tends to be more daunting to the uninitiated than a stroll in the woods. Also, keeping things light helps to keep new investors interested.

As Dale Carnegie roughly put it, “You catch more bees with a spoonful of honey than a gallon of vinegar.”