Fear-Based Financial Planning Versus Life In True Peace


Fear sells. It has an impact on the government, on businesses, on sales, and on your finances.


You can see it in television and radio advertisements, warning you that if you vote for one person or don’t purchase one product, you couldn’t completely ruin your life. Most of us like to say we don’t fall for these obvious scare tactics, but I’m amazed at how many people I meet with base their decisions on: fear.

Let's talk about the complex relationships between fear, anxiety, and financial peace. I'll share a couple of stories.

One of my long-term clients, Jennifer, came in to see me this week. Years ago, she had a structured settlement due to a problem caused during surgery. This has given her a lifetime payout or annuity, meaning she’ll get a certain amount of money per month for the rest of her life. She was coming into retirement and told me she was terrified she’d lose her settlement. And since it was such a big part of her retirement plan, she didn’t know what to do.

I asked her why she thought this settlement payment she’d been receiving her whole life would suddenly go away.

Then she showed me a stack of letters she’d received, all the contents telling her she could lose her medical settlement if she didn’t respond.

One piece of mail was a huge, obvious sale trick. It made it seem like her settlement was going to expire and offered to give her a lump sum instead of continuing her payout.

Another one almost seemed legitimate. It said that her case had been audited and flagged. She needed to contact her representative if she wanted to continue to receive her payout. In reality, though, it was a sale pitch, designed to prey on her fear of losing her retirement.

This makes me so mad.

Don’t Think You’d Fall For These Tricks? Not So Fast!

Many of your reading this may say “I would never fall for things like that!” but you still may be making decisions based on fear without realizing it.

This is where it gets interesting because fear is the most-powerful tactic to convince the brain to take action.

Scare tactics aren’t always as obvious as what Jennifer experienced above. Many companies use anxiety and fear as a weapon in more subtle ways that can end up being even more dangerous.

For example, another of my clients recently received a significant inheritance. Most people, when they imagine getting this large of a sum, imagine they’d be satisfied for life, but let's call him John came to me filled with anxiety that he’d run out of money. He was convinced he’d have to get a part-time job to help supplement his income.

I looked at what he’d received and what he anticipated to spend but could not figure out where this irrational fear was coming from.

He told me he sat down with a financial team that had been working with his family to disperse the funds. They’d told him if he spent over a certain amount per year, he’d be at high risk of running out of funds.

Fear can be irrational sometimes, but you have to separate yourself from your emotions to make a clear decision.

The first thing I asked was "what kind of fees the advisors were charging?" and he didn't know. 

I showed him how much money they were paid every month and it became clear that they didn’t want him to take too much per year or it would have a huge effect on their fees.

I’m not saying John should spend as much as he wants every year. I’m also not saying every financial firm is out to get you. But this company had no right trying to scare him into not using his own money because of how it would affect them.

If he had made a decision based on the fear they had caused, such as getting a part-time job, can you imagine what his quality of life would have been like? Definitely not good.

Feeling Fear And Then Overcoming It

The problem becomes being able to identify your fear and ensuring you make the smart decisions and not just because it’s inspired by your anxiety about the future.

Fear-based tactics exist when whatever answer you have to the problem doesn’t relieve your anxiety. If John got a part-time job to supplement his inheritance, would it ease his anxiety? No. He’d still be scared he wouldn’t have enough.

And it’s important to recognize the difference between a company that is intentionally trying to scare their customers and one that is simply showing concern. This is something I often reflect on in my own business! Do I intentionally cause fear in my clients?
 

Tired of client stories? Well, I have two more and these wrap everything up to explain the complex relationship between fear, anxiety and peace in financial planning.


There are two clients that come to mind when I consider the differences between fear and concern.

1. The first is a gentleman I worked with early on in my career. He was married, had three children and not enough assets to support his family if something happened to him. He was vastly under insured, so I continued to push him to update his life insurance coverage. Before he had a change, though, he discovered he had cancer, making him ineligible for new life insurance.

My intention wasn’t to scare him into paying for an expensive insurance policy to benefit me and my business. I wanted to increase the quality of living and peace of mind for himself and his family.

2. Another couple I work with were ready to retire. They had enough assets to leave their jobs, but their investments were too risky. If there was a sip in the market, they’d lose a lot of money. But if they could lower their risk level, they’d be perfectly fine, regardless of how the market performed.

They agreed to make these changes it and it truly helped their quality of life.

True Peace and A Better Quality of Life Are Possible

If you don’t have the peace of mind this couple felt, sign up for a free financial consolation with me.

We’ll work together to identify your challenges, the issues that give you anxiety and what scare tactics you may be susceptible too. We’ll also find a solution to your anxiety without feeding into it. I want to increase your quality of life and help you find true peace as you go forward.

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