Today's economy

Muskoka chairs and unanswerable questions

By Kevin Press,

Comments (2)

The Globe and Mail’s Rob Carrick and National Post’s Jonathan Chevreau are arguably Canada’s most influential personal finance columnists. They both have strong, loyal followings and in each case I think that’s well-deserved. Carrick and Chevreau appear to be genuinely driven by their readers’ interests. And remarkably, given how often they publish, they manage to avoid writing the same thing at the same time.

Last week though, both made a similar comment that I found striking. “It’s RRSP season, so let’s all start worrying about whether we’re saving enough money for retirement,” wrote Carrick, sarcastically. A couple of days later came this from Chevreau: “Pension and retirement anxiety has hit fever pitch, if the number of financial industry surveys released this week is any indication.”

The two pieces are very different, but I think this shared observation is important. RRSP season is upon us, and it’s hard to argue that the trepidation many Canadians feel about retirement planning doesn’t have something to do with the advertising messages around them.

Fear and anxiety have always been a part of marketing. The text books teach us three steps: 1) introduce the product or service and explain its benefits; 2) show satisfied customers enjoying those benefits; and 3) make people feel like they’re missing out on something important if they’re not in on it.

A lot of financial services marketing fits neatly into those three categories. We explain the benefits of retirement planning with dreamy images of Muskoka chairs and baby boomers on motorcycles. We use case studies to show off happy investors. And we pose virtually unanswerable questions about how much you need to save for retirement that leave people feeling like they haven’t done enough.

Steps 1 and 3 in particular represent a kind of dream-fear model of financial services marketing that has long-since outlived its usefulness. (Most marketers – me included – have been guilty of this in one form or another over the years.) The truth is that Canadians are on to us. They see right through it, and they’re no longer impressed.

I think there’s reason for optimism here. Smart marketers have figured out that their role is to engage consumers, not scare them. It is to inform them, not promise them a lakefront property. The quicker our industry makes that shift, the better off we’ll all be.

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Ron on

I feel the fear. I am an accomplished numbers cruncher, set up spreadsheets, tallied actual expenses, tracked my investments, calculated their IRR, and set up dozens of scenerios. My realistic model says that we can retire now. However, every time I read a doom saying article, I add another cushion…

1) Assume that we both live to 90, which is something like a 4% chance. (One financial article said the chances are 36%.)
2) Assume that our expenses stay the same until we die, though I can’t imagine myself tramping through Europe when I’m 90.
3) Assume that my investments do no better than inflation. (My historical IRR is 4.5%.)
4) Ignored the value of my house ($350k). (Saw one article where the Financial Advisor left a $900k house as the cushion.)

So we keep working. I suspect that my kids and the government are going to get one heck of a pay check when we kick off.

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