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'Decision fatigue' hampers financial planning

'Decision fatigue' hampers financial planning

Four million Brits are put off financial planning because of decision fatigue, new analysis has warned. 

Research from Scottish Widows found Brits claimed not to have enough mental space to make the right choices when it comes to difficult decisions, and a further 6.4m people said they did not have time to do important life admin.

The research revealed 51 per cent had not made a decision on whether or not to purchase critical illness cover, while 47 per cent had never even thought about making changes to their pension. 

The analysis also found 38 per cent had not come to a decision on whether they will buy life insurance or not. 

When asked for the reason why, 19 per cent confessed they were put off financial admin because it was too time-consuming, while 17 per cent claim it is too stressful.

Robert Cochran, retirement expert at Scottish Widows, said: “It’s easy to get caught up when dealing with day-to-day decisions in our hectic lives, but this is stopping many of us from spending the right amount of time making important decisions, which can impact our financial wellness.

“Getting to grips with your financial situation, like figuring out if you’re putting away enough for retirement, is a big decision to make about our future, but technology is making it much easier for people to picture their retirement – seeing your future self makes it much easier to make choices now than a bunch of complicated numbers.”

The research questioned more than 2,000 UK adults and was carried out online by YouGov. It follows the pension provider’s latest campaign which encourages people to visualise a positive future and take action now to make it a reality. 

Professor Mark Fenton-O'Creevy, professor of organisational behaviour at The Open University Business School and expert on financial decision making, said: "Important decisions about our lives can be easier to tackle if we create the mental space to deal with them.

"Putting lots of time and effort into everyday choices not only reduces our time and mental resources for more important decisions, it can be a way of avoiding difficult choices we should be making.

"The good news is that it is possible to make small changes to create more mental space for better choices."

Martin Bamford, a chartered financial planner and managing director for Informed Choice, said: “It seems that we spend a disproportionate amount of our time and mental energy on relatively trivial decisions, and too little on the really important stuff.

"Life administration, including financial decision making, can be quite dull, so I’m not too surprised by the findings of this research.

"One way to make it more engaging is to link those financial decisions to your big picture plan, so you can see the connection between staying on top of money matters and getting to live the life you want to lead.”