‘Immediate Society’ Trumps Long-Term Planning

By Cyril Tuohy

InsuranceNewsNet

As a society, we suffer from distracted driving — indeed some of us have died from it. Nor is there a Gen Xer or Gen Yer who hasn’t suffered the brunt of distracted socializing — even if they haven’t called it that yet. So why not distracted financial planning?

Well, it seems we suffer from that too, according to the 2013 Planning & Progress Study conducted by Northwestern Mutual.

Devices like the iPhone — which seem like they’ve been around forever but actually revolutionized the mobile device market in the recent past of summer 2007 — were built to help us operate more efficiently. And while the hand-held era helped usher in the era of the “Immediate Society,” it also found ways to distract us that we’d never thought possible before.

“It’s oxymoronic,” Mark McLennon, vice president of Northwestern Mutual’s Investment Advisory Services, said in an interview with InsuranceNewsNet. “I don’t have enough time because I’m on timesaving devices.”

Some distractions are OK, even expected, McLennon said. It’s OK to be distracted by family issues, and no one would begrudge a distraction or two to tend to urgent business, particularly if meetings drone on longer than planned. Even when it comes to planning for retirement, it’s OK to be distracted, but only after you’ve started a long-term retirement plan.

It’s definitely not OK to be distracted from starting a plan as soon as possible, or using distraction as an excuse to delay opening up a 529 plan, an individual retirement account or simplified employee pension plan, or signing up for that employer-sponsored 401(k). The sooner consumers open an account, the better off they’ll be.

“Start early; remove the distraction,” McLennon said. “Get something rolling, then let the distractions come back (if necessary).” The point is, just get going with your long-term planning.

For many, that’s easier said than done. Those distractions are fighting for Americans’ attention, the survey found,  with 31 percent of Americans saying they found the immediacy of society (e-mail, texting, instant messaging) distracting, and 69 percent saying the fast pace makes it hard to stick to long-term goals, down slightly from 74 percent in 2011.

How deep the mobile distractions become, time will tell. Even if the rumors are true that computer watches are on their way, mobile devices are here to stay, and their use will only grow. Thirty-six percent of the survey respondents said their use of electronic and mobile devices over the past year had increased, compared with 6 percent who said their use had decreased.

Northwestern Mutual executive vice president Greg Oberland said that while technology has brought on “transformative change,” many decisions should not be based on speed. “Having a long-term financial plan is a perfect example,” he said in a news release. “There simply are no shortcuts for that” — even if iTunes sells an app promising $2.99 shortcuts to long-term planning.

A majority of boomers (74 percent) and matures (75 percent) said the pace of society makes it harder for them to stick with long-term goals, whereas only 61 percent of Gen Yers and 63 percent of Gen Xers said the same, the survey found.

This is consistent with additional findings from the study showing that 26 percent of people say they either “often” or “always” feel too busy to think about long-term goals. Meanwhile, 63 percent think their financial planning needs improvement; and among them, the most common obstacle is not having enough time (24 percent).

With so many Americans feeling pressed for time, there’s an opportunity for financial advisors to step in and slow life down for their distracted clients. Younger generations, old enough to remember the Great Recession of 2008, are attuned to the importance of saving, even if they have trouble doing so.

Advisors who make sure clients stay the course — so long as the advisors themselves are not distracted — will be able to provide a real service, McLennon said, especially with studies consistently showing that workers with a plan feel more secure about reaching long-term goals.

Both the advisor and the client “should go into that meeting fully engaged,” McLennon said. Now, if the advisor appears as distracted as the client, all bets are off, and the client should look for another advisor — immediately, even if that means whipping out the mobile device.

Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].