The Australian Financial Review has this good article on new research on how long COVID-19 lingers in the air from Bristol-based researchers. Link.
Is optimism the reason that people fail to plan? Or is it because we haven't shared what we know with them? Some recent commentary around research ASB Bank has done suggests that as a reason why about 40% of adults in New Zealand have less than $1,000 available for an emergency.
Most people in the financial services sector make plans. We are used to developing budgets, running projects, setting goals, and seeking the information necessary to achieve them - and then taking action. It is somewhat comfortable to believe that the reason people do not do what we do is because they have some fundamental difference, such as optimism bias. The problem is that this relieves us of responsibility to act - 'nothing to do here, it's just how the world is' - which is deeply unhelpful if we really want to shift the dial and help people.
Of course, it would be nice if there were some great academic research to evidence whether the relevant obstacle is optimism, indifference, ignorance, or some other factor. I have seen good research around planning which indicates high discounting rates are implied by the approach individuals take to future planning.
In addition to that, I know that once a client sees a financial adviser, they tend to take different actions. That should give us cause for optimism. If the problem is something we can change, then we can focus on providing the circumstances that make change possible. Maybe that means that the optimism bias is changeable under specific circumstances - or maybe it means that it is simply a lack of knowledge that stands in the way of better plans.
It is easy to assume that people know what we do - especially if we live similar lives. Superficial things such as cars, clothes, and our casual social interactions seem to suggest we have much in common. Occasionally we get insights, the gag that fails, the conversation where you realise someone has such a very different life to your own, they have had different experiences and have received different information. Most advisers can relate stories about the reaction of clients to all sorts of facts that we treat as common sense, such as: that disability is much more common than early death and usually caused by illness not by injury.
Optimism bias may have some explanatory power in the overall mix, but I am encouraged by the experience of advisers that a simple lack of knowledge has a big role to play in this problem. When people know better, they tend to do better. I want to help them to learn.
Here is a handy hint for Research and Advicemonster subscribers!
If you're looking to compare a Funeral Plan, you can access our static ratings and policy documents directly on Quotemonster.
Once you've logged in, click the Research Tools button, the the purple Research Tools tab and scroll down to "Funeral Plans"
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With a growing issue of child obesity, the Chilean Government implemented several preventative measures in 2016. The government:
- Banned advertising unhealthy foods to children
- Prohibited unhealthy foods being sold in and around schools
- Included bold labels on packaging
The new regime increased consumer awareness, ensured that Chile reduced the number of premature deaths that occurred each year as a result of obesity as well as ensuring that national healthcare costs wouldn’t skyrocket as a result the increased rate of obesity.
I am not sure if Chile's policy decisions are the right ones, but it is a challenge to us to consider what we need to do. New Zealand has a problem with obesity. Compared to Chile, our situation is much worse. Chile is about the 60th most obese country with an average BMI of 26.8, compared to New Zealand at 28th most obese country with an average BMI of 27.9. Although obesity is listed as only the fifth largest cause of deaths by risk factor (see below) it is also strongly correlated with high blood pressure and high blood sugar - often diet being a common cause of all three.
Click here to read more
According to anew report issued by Russell Investments in Australia states that financial advisers add at least 4.4% or more every year to clients - and a total of about $560,000 better off overall. Rather than see this as another shot-fired in the 'active' versus 'passive' debate, I prefer to focus on the behavioural aspects that financial advisers bring to the relationship - that applies to risk management, to insurance, to home loans advice, and debt repayment, and holistic financial advice. Readers will know that I am made keen on technical aspects of our industry: policy comparison especially, but also financial performance, price, underwriting, and digital advice. All these matter, but the central territory for advice is helping clients change.
The study worked with a number of advisers from US, Canada and Australia for the past 20 years and identified five key areas of financial advice in the report: annual rebalancing, preventing behavioural mistakes, planning and additional wealth management services and tax-smart investing. Click here to read more.
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Position Title: Researcher
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Update and maintain QPR database
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The new research datbase V118 has just been uploaded onto Quotemonster with a few rating changes as outlined below:
- Partners Life new policy documents dated 5 /12/ 2018 for all products
- Pinnacle Life's Funeral Cover new policy wording
- Nib new rating for serious illness wording
- Westpac remediation for Life and Trauma
- Onepath updated policy wording v 4.4
- Co-op Bank life new policy wording for Life and Trauma
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