Inertia (noun): 1. a property of matter by which it remains at rest or in uniform motion in the same straight line unless acted upon by some external force
2. indisposition to motion, exertion, or change
Inertia is a powerful concept and can find its way into our everyday lives. Sometimes it’s just getting out of bed in the morning that isn’t easy. Back in college, I know I always had a hard time starting essays. I would often wait until the last minute. The external force that acted upon me to get me moving was the due date the next day. However, once you start moving, it often becomes effortless to keep going. When I finally would begin my essay, I would quickly get into a flow, and the next thing I know, it would be all buttoned up.
But there was always a consequence. I’ve always felt that writing came somewhat natural to me, but that was typically not enough to get me an A mark on my papers. By waiting until the last minute, my work was too often strewn with simple grammatical errors. When you finish writing your paper at two in the morning, that careful proofread is too easy to overlook.
Financial Inertia
Financial inertia can be a particularly challenging situation because it can often lead to real-life consequences. Financial inertia is when individuals put off financial planning even though they know they need to start. It is often borne not out of laziness but out of the fear of making a mistake and losing hard-earned savings, confusion over how to get started, or feeling that the barriers to entry are too high. These justifications turn into habitual thinking, which in turn only perpetuates the inaction.
Real-Life Consequences of Financial Inertia
Getting a B instead of an A on some college papers due to inertia had consequences. However, those consequences pale in comparison to the consequences of waiting too long to begin financial planning. The longer you wait to put your money to work, the harder your money (and yourself) will have to work in order to get you to and through retirement. When you attempt to make your money work harder through investing, this typically means you need to take on more risk. Taking on extra risk to attempt to catch up can result in disastrous outcomes. This is why it is so important to overcome financial inertia and take the first step to secure your financial future.
“Is it even worth it? Couldn’t I do it myself for free?”
This is one of the most common thoughts that cause financial inertia. What we typically see with new clients who had this feeling before, it is only after having an advisor for a period of time before they realize the true value of having someone dedicated to guiding them down the path to financial freedom, always having their best interest in mind.
If you have managed your money yourself up until this point, it can be hard to wrap your mind around paying someone to do the same job. The truth is that a well trained financial advisor will be able to spend a lot more time and attention on your portfolio. This frees up your time to focus on the more important things in life like your family and job. Peace of mind regarding your financial plan is priceless.
During periods of market volatility or high levels of stress, sometimes even the most disciplined DIY investors can be prone to making emotional decisions that can lead to big speed bumps towards your plan. An advisor is someone to lean on when you have big life events, there’s a lot of volatility, or even if you just want someone to talk to.
Further, a well rounded financial advisor has access to state-of-the-art financial planning software, investment research and will be able to guide you into investment vehicles that you may not have even been aware of. Our firm has invested heavily in technology to provide clients with all the tools they need to keep track of their portfolio as well as their financial plans.
“I’m too busy, and getting started seems like a lot of work.”
This is one of the most common thoughts that hold people back. The traditional thought is that engaging an advisor to begin creating a robust financial plan requires a lot of paperwork, multiple in-person meetings, and a lot of hoops to jump through. While this may have been true in the past, advisors are increasingly adapting their practices to be more modern and efficient.
At DeWitt, we can work through a first virtual meeting to an account opened in less than a day. Leveraging technology, we can meet virtually and have all paperwork signed digitally. We even have unique tools to help us get to the root of your investment preferences and goals quickly. If the only thing holding you back is the perception of a lot of work and hassle, we encourage you to give it a second thought!
“I feel uncertain about the future, and doing nothing is easier right now.”
This is a feeling that is typically borne out of a few different things. Some may have learned to be distrustful of the financial services industry. Others may feel like their financial situation is in a bad place, and it is easier to ignore the situation than to take the first step. Have you ever felt or known someone that avoided going to the doctor out of fear of what they might learn? It is similar to that. We advisors can encourage folks and try and motivate people to engage an advisor, but it comes down to the individual. You must be willing a courageous enough to begin the conversation with an advisor and ask the questions that scare us about the future.
Bottom Line
Financial inertia is common and can be difficult to overcome. If you feel you may need to take action, there has never been a better time than right now.
At DeWitt, we have made the first step easy. Click below to take the first step.