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Retirement Planning Motives: Fear or Confidence?

It has been estimated that roughly 33{aa955c166aa18488544e22ee37e155faf9f105630a82e6f31f72aeae463d8b78} of American adults have not saved a penny toward retirement. Another 23{aa955c166aa18488544e22ee37e155faf9f105630a82e6f31f72aeae463d8b78} have less than $10,000 set aside in retirement investments. Statistics also suggest that as many as 80{aa955c166aa18488544e22ee37e155faf9f105630a82e6f31f72aeae463d8b78} do not even know how much they will need to have saved in order to enjoy a comfortable retirement.

These are all statistics financial advisors and dealer-brokers are well aware of. They are statistics that are often used to try to motivate people to start saving for retirement. The question is, how are people being motivated? Are they being motivated by fear that they will not have enough money in retirement, or are they being motivated by confidence in a sound financial strategy that will help them reach their retirement goals?

Negative and Positive Motivation

There are plenty of divergent views among financial advisors over the effectiveness of both negative and positive motivation. On the one hand, legitimate fear has proven to be a very strong motivator in many areas of life. Young children learn to behave out of fear of being punished. Taxpayers are motivated not to cheat out of fear of being audited. The list goes on and on. Still, negative motivation tends to have its limits.

Positive motivation works quite differently. It does have its limits as well, but those limits are not as numerous. They are also not as restricting. Motivating a person to save for retirement based on the possibilities that await is a lot easier than trying to get someone to save because they are scared.

Positive motivation gets people thinking about the things they could do in retirement if they save enough. They can dream of traveling the world. They can begin scheming about how they will pursue their passions and hobbies. They can imagine spending more time with grandchildren or buying that dream retirement home they have always wanted.

The limits of positive motivation are only related to the imaginations of retirement savers. If a financial advisor can generate confidence in a proposed retirement plan, saving and investing suddenly become a lot easier for a client just looking for a reason.

Advisors Need a Positive Attitude

At Pasadena-based Western International Securities, both employed and independent financial advisors and broker dealers serve clients around the country working on their own retirement plans. The dealer-broker and its advisors know the value of positive motivation. They also know that for clients to have confidence in their financial plans, advisors have to be positively motivated as well.

It’s true that financial advisors don’t always have confidence in current market conditions. But they should be very careful about letting that lack of confidence dominate conversations with clients. It should also be tempered with the knowledge that markets tend to rebound over time. Even if things are not going well now, the odds say they will be at some point in the future.

The other side of the coin is enthusiastically displaying confidence when the markets give financial advisors plenty of reasons to do so. The advisor who confidently presents a financial plan is much more likely to win the heart and mind of the client than one who simply presents it as a matter of fact. Indeed, confidence breeds confidence. And confidence in the mind and heart of the client becomes positive motivation to invest.

Financial advisors and retirement savers can look at retirement planning in one of two ways. It can be approached from the perspective of fear or the opposite perspective of confidence. Wise financial advisors prefer the latter. Retirement planning approached from a position of confidence opens the door to many more possibilities.

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