Make financial decisions in haste, and repent at leisure

New research suggests close to four million of us “rush and regret” financial decisions.

A representative of more than 2,000 people commissioned by NFU Mutual highlights the extent to which we rush important financial decisions, and suggests that such haste is one of our biggest regrets. Just ask anyone who was ever mis-sold payment protection insurance or talked into a high-value loan years ago that they then found unsustainably difficult to repay.

According to this survey almost one in five Britons (18 per cent) admit that they’ve rushed into financial decisions, primarily through lack of time. Such haste is often blamed on an obsession with quickly clearing tasks off the “to do” list.

This “do it quickly and tick it off” mentality is one thing when it comes to choosing a bunch of flowers, but can cause all sorts of bother if applied to a life assurance package.

When asked how many hours they spent on making various kinds of decisions in their lives, interviewees on average spent 16.5 hours deciding where to go on holiday.

Below this were purchasing a major household item (14.2 hours), choosing a pension provider (9.1 hours), choosing a satellite TV package (6.9 hours) and choosing a general insurance provider (5.7 hours).

The various decisions offered for having made hasty decisions included avoidance of making the decision for too long, and lack of understanding of the details of different deals on offer, Financial products can, it’s true, be described in the most opaque of language.

Psychologist Glenn Wilson has worked alongside NFU Mutual on the study, and says pressure on decision making is greater now than ever before, with modern life not only increasing the number of decisions we have to take every day but also presenting us with a bewildering array of choices when it comes to every kind of product and service.

For example, there are now more than 560 channels available through satellite and cable providers, whereas once we simply had the four terrestrial providers. Consumers also have the choice of dozens of gas and electricity suppliers since deregulation of utilities in the 1990s.

According to the survey, trust in financial services is also an issue, with the vast majority of Britons (98 per cent) saying they didn’t always trust the advice given to them, primarily because they believe profit is prioritised over customer service or financial services companies don’t have their customers’ interests at heart. Many respondents also believed that the financial services industry should take more time when dealing with customers.

“There are some decision in life that seem so big we don’t know where to start,” says Peter Wallin, personal finance specialist at NFU Mutual. “But we’re trying to remind people that time is often the most important investment you can make, especially when it comes to planning for your future.”

Leeds-based independent financial adviser Yvonne Goodwin agrees that the public are generally wary about the financial services industry, after such scandals as PPI, interest swaps 
for small businesses and the continuing Libor interest rates controversy.

“The first thing I’d say to 
anyone who feels their finances need attention but it all seems so overwhelming, is to take a 
day of holiday a year to look 
ahead and plan, and weigh up deals at different banks, with insurance providers, utility companies and phone providers. It’s time well spent, because you could save yourself enough money across the year to pay for a good holiday.

“One woman I know shopped around for car insurance, 
having been with the same company for years. She found she’d been paying £1.200 more than she needed to. Generally 
you don’t get much reward, if any, for loyalty.”

Goodwin believes there is too much regulation of financial services, meaning that “it’s easier to understand online gambling than it is to open a current account.”

Dr Glenn Wilson advises choosing the time for major decisions carefully, “... as the day progresses our decisions become more and more reluctant and irrational. Ideally we should identify which decisions are important and make them when we are fresh, not tired, and preferably after a good meal.”