Welcome to the 37th edition of #theFutureReadyAdvisor Newsletter!
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The Battle Between the Alarm Clock and the Gym
It’s January 2nd, and you’re fired up. This year, you vow, will be different. You’ve signed up for a gym membership, laid out your workout clothes, and set your alarm for an early start. The goal? To be in the best shape of your life. Fast forward to the next morning. The alarm blares at 5:30 AM.
Outside, it’s freezing; your bed is a cocoon of warmth. The battle begins — not between you and the weights, but you and the snooze button. Just ten more minutes, you think. Suddenly, it’s 7:00 AM, and your “workout window” has closed. This scenario isn’t just about missing a workout; it’s a classic example of the tug-of-war between our present self and our future self.
Understanding the Disconnect
Why do we struggle so much with decisions that require us to consider our future well-being? According to Hal Hershfield’s research on the “Future Self,” it’s often because we view our future selves as different from our current selves. This psychological distance creates a disconnect that makes it challenging to prioritize long-term goals over immediate desires.
In the world of behavioral economics, this phenomenon is well-documented. When faced with the choice between an immediate reward and a future benefit, we often opt for the immediate reward, discounting the future gain. This is like choosing the instant gratification of a delicious meal over the long-term benefits of healthy eating. Our brains are wired to prioritize immediate satisfaction, a trait that has deep evolutionary roots.
The Marshmallow Test, conducted by psychologist Walter Mischel, illustrates this concept with children. The children who could delay gratification by waiting 10 minutes for a second marshmallow, rather than eating the first one immediately, tended to have better outcomes later in life in areas such as academic achievement and health. This principle applies equally to adults, whether it’s sticking to a diet, saving money, or planning for retirement.
Bridging the Gap
For financial advisors, the challenge is not just personal but extends to helping clients envision and invest in their future selves. How can we close the gap between our clients’ present desires and future needs? Here are three tactics advisors can use:
- Make It Vivid: Just as age-progressed renderings have been shown to increase savings behaviors, helping clients visualize their future selves in a concrete and detailed way can make abstract goals feel more immediate and real.
- Connect the Dots: Relate current actions to future benefits explicitly. For example, frame retirement savings not just as setting aside money but as investing in a lifestyle that allows freedom and security.
- Emphasize Continuity: Encourage clients to see their future self as a direct continuation of who they are today. Highlighting the personal values and goals that will remain constant over time can help clients feel a stronger connection to their future selves.
The Path Forward
Each morning we face our own version of the ‘snooze button dilemma’. But understanding and leveraging our relationship with our future selves can profoundly impact the decisions we make. We need to bridge the cognitive gap that separates our present and future selves. Encouraging a vivid, continuous, and emotionally connected view of the future self can help individuals make choices that balance immediate desires with long-term aspirations.
While the future might seem far off, the decisions we make today are the steps that lead to it. By fostering a strong connection between our present and future selves, we can make choices that satisfy immediate needs without sacrificing what we aspire to become. For financial advisors, employing strategies that foster this connection can be the key to helping clients navigate their paths toward financial security and personal fulfillment.
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