Some financial plans come with long term commitments with heavy repercussions for failures to adhere to the plan. In some cases, more harm will have been done than if nothing had been recommended in the first place. Buyer remorse is very real and where significant monies are involved, those feelings get intensified. Therefore, here are 3 considerations (not exhaustive) to reduce financial planning buyer remorse.

Consider the possibility that the financial plan regular commitment cannot be sustained.

When that happens, what can be done? Are there contingencies to deal with prolonged job loss not attributed to disease or accident? The gig economy is a lot larger than previous generations and long term income stability is unlike the past.

Where income is variable, the good years may be followed with bad years that need to draw upon reserves built up. Assuming reserves were properly set aside that is.

In the case of CPF Special Account contributions for retirement, not committing monies for a period of time does not impact what has already been in the account. Furthermore, the interest rates on CPF Special Account are not too shabby.

Buying a life insurance policy can be a long-term commitment. An early termination of the policy usually involves high costs and the surrender value payable may be less than the total premiums paid. ~ Common Phrase in Benefit illustrations.

Consider the possibility that there will be new knowledge acquired that alters hindsight.

Past events cannot be changed, only how one wants to look at it.

Where returns are not guaranteed but costs are guaranteed, the hindsight perspective realization can trigger buyer remorse especially when the costs are not properly understood or value expected did not materialize. Some might describe this as a woke state but damage has been done. Let’s just say that over promise under deliver is not good lah.

Certain investment instruments may been deemed complex by the regulators and it is better to bring the financial literacy levels up before using/recommending such instruments.

Consider the possibility that there are alternatives of better fit and the evaluation of them can be objectively assessed.

This is where the FDM (Facilitating Decision Making) process will tick several checkboxes. Ample consideration of alternatives will be done and the relevant nuanced weightings objectively applied and the conclusion from the process is as unbiased as it gets.

Quick recap of the 3 considerations that help reduce financial plan buyer remorse.

1. Consider the possibility that the financial plan regular commitment cannot be sustained.
2. Consider the possibility that there will be new knowledge acquired that alters hindsight.
3. Consider the possibility that there are alternatives and the decision to commit is not to be taken lightly.

There can be challenges that prevent an advisor representative from making these considerations. Namely the following:

Commission Driven Remuneration – Such a set up does not guarantee an alignment of interest between the planner and the client. As the industry still largely works on a proposal-acceptance mode, the client carries the responsibility to select a representative that fits them best, and is confident that he/she be able to act in the best interest of the client.

Ethics have different shades – Does disclosure and acknowledgement of acceptance mean everything will be alright?

Stuck in reasonable basis mode – The recommendations are far from the level of diagnostic medical advice because outcomes are not statistically stable compared to medicine. (Read more here)

Hopefully insistence on those 3 considerations can help reduce financial planning buyer remorse. Intertwining threads of alignment of interest, good prophylaxis and better decision making can provide a tightly assembled rope that should make a good hangman noose on bad financial planning practices.