Are you a deer when it comes to financial planning?

In 2019, we published an article about the financial ostriches of the world: the number of Brits sticking their heads in the sand when it comes to thinking about their financial future. Today, we are seeing more and more financial deer: in the headlights of their financial decisions, they know they need to move but are not sure which way to turn. Often, our clients admit it’s something they should really have sorted out a long time ago, and now crunch time feels like it’s speeding towards them. But they also agree that once they have a financial plan in which they have confidence, the fear or inertia that prevented them from taking action disappears.

Avoiding financial planning is common in the UK 

First thing to understand is that you’re not alone. A 2023 DWP¹ report shows that:

• 38% of working age people (equivalent to 12.5 million) are under-saving for retirement, if they wish to meet their Target Replacement Rate (TRR) – a savings target indicative of an individual’s ability to maintain their pre-retirement standard of living.
• People set to retire in the 2030s and 2040s are more likely to be under-saving. Statistics suggest that around 42% of people who meet state pension age at this time are not set to meet their TRR.
• Shockingly, higher earners are more likely to be under-saving relative to TRRs. 86% of those who earn a gross annual income of less than £14,500 (the lowest earning band) are set to meet their TRR, whilst only 45% of top earners are saving enough to maintain their current pre-retirement standard of living. 

 Reasons for postponing financial planning

Feeling overwhelmed and resistant to the idea of creating a financial plan is entirely normal and is a common reaction by Brits across the board. Research² for the Department of Work and Pensions (DWP) into how people engage with their pensions, found that people generally regarded their pension with fear, complacency or detachment, making them less likely to engage proactively with a financial plan. Participants stated that, often, it was not a lack of information but an overabundance and overcomplication of it that led to them being discouraged from engaging in pension schemes. One participant states:

““I don’t know much about pensions and was making wrong decisions and found it overwhelming, so they need to educate and simplify it so people can understand it straight away without much research.” (Male, 25-34)” (DWP, 2024).

This opinion was shared by many, leading to them feeling stuck in the headlights. However, there were gender differences in how this financial anxiety and overwhelm manifest. The DWP, found that women were more likely to express a lack of confidence and fear to make the decision to engage in pension schemes, despite acknowledging the importance and feeling the desire to do so, whilst men were more likely to cite the presence of more pressing financial matters as their reason for disengagement (DWP, 2024). 

The need for a trigger to take financial action

Whilst financial deer do know they need to make important decisions, they feel frozen by the idea of addressing the issue, and generally require an urgent trigger to cause them to make a financial move – often at the last second.

The DWP report found that people often require a trigger to spark an impetus with their financial engagement, such as a change of job or a big shift in their family or living arrangements.

The disadvantage of being a financial deer

The lack of an urgent trigger is certainly something that resonates with our work helping individuals and couples plan for their financial futures. Many of our clients say they have been meaning to sort out their long-term finances for a while, but there have always been other, more pressing things, to deal with first –or they find it too overwhelming to stare into the headlights of their finances: “I find it too much looking at it in black and white. I’m just like ‘yeah I know it’s something going towards something for future’ but […] any of the details I don’t read anything, I just find it too much, it’s just too much information to take in.” (DWP, 2024).

Sitting in the headlights for too long creates a stress of its own. A report by Carnegie (2023) states:

“This preoccupation is likely to have a detrimental impact on our performance in work and education. It is also likely to compromise our ability to fully enjoy the things that make life worth living.”

The confidence created by a financial plan

Fortunately, if you are one of the very many financial deer, there is a simple solution: all you have to do is make the first step – and you don’t have to do this alone.

If you feel overwhelmed by the number of financial options before you, it is often useful to seek advice from a financial planning expert (chartered status is a good indication of this), who can filter out all the noise.

One of the reasons people feel so overwhelmed when trying to find information on their own is that lots of advice is very general. A good financial planning expert will take the time to understand your personal circumstances and goals, and will work in collaboration with you to devise a bespoke plan to help you achieve them. They should also be someone who will work proactively with you to review those plans regularly to help you adapt them as either your situation or objectives change. They will look both ways before you cross the road, so you never find yourself in the headlights again.

Sometimes, making a decision is overwhelming; you don’t know which way to turn, so it feels easier to stay where you are and not move at all. To extend the metaphor, a deer that doesn’t get out of the road, runs the risk of being hit by a car. Translating this into financial planning: we can’t stop the clock ticking, so if you don’t move, eventually you will be near retirement age without a plan to enable you to stop work. Moreover, all the time you remain trapped in inertia, you run the risk of a permanent niggle that there is a big thing that you need to address, which can reduce your ability to enjoy the here and now.

If that sounds like the sort of financial planner you want to work with, we’d be very happy to see if we might be able to help you with your long-term financial planning.

If you’d like confidence in your financial future, call 01732 449 799 or contact us here.

SOURCES

1. Analysis of future pension incomes, DWP, 2023
2. Engaging with Pensions at timely moments, DWP, February 2024
3. Carnegie, April, 2023 Carnegie-UK The long shadow of the cost of living emergency