Regret is one of the most powerful emotions, and it affects everyone everywhere, particularly when it comes to financial planning. According to a recent survey undertaken by The deVere Group, a U.K.-based financial advisory firm that works with wealthy individuals across the globe, high-net-worth individuals are no exception when it comes to regret. What they regret most is not having put in place a regularly reviewed personal financial plan earlier in their lives. Their second biggest financial regret lies in inconsistently scrutinizing their personal investments and taking on too much unnecessary debt.
This has become a concern to many wealthy individuals after the 2008 financial crisis, says Nigel Greene, founder and chief executive of the deVere Group. “It’s clear that wealthy individuals value highly the benefits and opportunities that long-term financial planning brings them and their families, and that they understand the importance of routinely reviewing those plans to ensure that they always remain ‘on track’ to reach their financial goals,” Greene says.
Even though high-net-worth individuals have greater access to a financial advisor and a greater financial cushion than others for any bad decisions, the regret they feel with respect to not having planned thoroughly can impede their ability to future financial planning as much as those who aren’t so wealthy, he says.
“It’s up to financial planners, then, to work through that regret and to get people to understand that no matter how big a regret they might have with something they have done or not done in the past, a bigger regret is coming if they don’t do something now,” he says.
The impact of financial regret is even greater for those whose means are not so extensive, says Richard Peterson, managing director at MarketPsych.
Whenever people regret a financial decision, they tend to evaluate themselves compared to others and more importantly, compared to where they think they should be and where they’re at.