Retirement Planning Marketing Suffers From The Blepfard Effect

Think back, for a moment, to when blepfards were introduced. Remember what they felt like in your hands? Remember what they felt like next to your skin?

Of course you don’t. Blepfards don’t exist. And because they don’t exist, trying to imagine what it’s like to hold it and feel it is a fruitless effort.

This is what I call the blepfard effect:

Asking people to imagine a situation, a state of mind, or something that they can’t possibly imagine because they have no basis of experience to do so.

Today’s retirement planning marketing efforts suffer from the blepfard effect.

For good examples, go to ING’s or to Wells Fargo’s Retire Secure Index sites. What they have in common: Answer six simple questions about your finances and retirement expectations, and VOILA!, these sites will tell you if you have enough money to last you your retirement years, and they may even produce a “personalized retirement plan” (oooh!).

Problem is, it’s just not that simple.

Asking someone who is ten, fifteen, or even just five years away from retirement to imagine what kind of retirement lifestyle they want, how much they’ll need to live on, etc. is a fruitless effort. Yet, that’s exactly what today’s spate of retirement calculators and sites ask.

Pre-retirees have questions, not answers. Pre-retirees want to know:

  • How likely is it that my income will continue to grow unabated from now until I retire?
  • Is my current investment style truly as conservative or aggressive as I might think it is?
  • Will I have to make large investments — like children’s college tuition, parents’ health care or buying a second home — between now and when I retire?
  • How much money will l really need on an annual basis to live my desired retirement lifestyle, and what kinds of retirement lifestyles are we even talking about?
  • How much money will I need for health care in retirement?

The list goes on. I won’t drag this brief on and on with all the questions that I, myself, can come up with.

If financial services firms want to effectively market their retirement planning services, they’re going to have to adapt a new approach. Today’s “six simple questions” approach is overly simplistic, and, quite frankly, insulting to those of us with a positive IQ.

If you’d like to know more about what approach I think will be successful, please take a look at my first Aite Group research effort. It’s available for free on the Aite Group (pronounced Eye-tay Groop) web site. Click here for the PDF.

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9 thoughts on “Retirement Planning Marketing Suffers From The Blepfard Effect

  1. Ron,

    You have no idea how timely this post is. And how you characterize the blepfard effect is similar to what I’d describe as the frammis conundrum: expressing dubious quantitative output as the calculated result of fuzzy qualitative input and then acting as if it means something.

  2. Blepfard – loving that word. I think I need to incorporate that into a sentence today. Maybe it’s an expletive that you can use to begin any thought.

  3. Ron….I agree that consumers need more than a number and your action items are spot on. But I’m not so sure that a six-question calculator is “insulting”.

    To me, anything that promotes awareness is better than nothing. Making people aware that blepfords exist is the first step in getting them to change their behavior.

    Having said that, both Wells Fargo and ING, do little in their “number sites” to move people to the next step. I think that’s the bigger shortcoming in these efforts.

    P.S. Thanks for the free sample of your Aite Group work. Looking forward to more great stuff.

  4. Yes, nice first effort for Aite. Congrats!

    Along your line of thought, one of the questions I always thought was inane is, “What is your tolerance for risk? Circle one: Low Med High”

    Talk about intangible. No context. No comparisons. No examples. Risk? Of what, what is potential outcome?

    Better would be to give numerical examples of “risk” involving historical performance, drawdowns, holding periods, and so forth and ask people to pick from those.

    I wonder if “Social Media” – gawd I hate that name – might be a good answer for this tangibility issue in personal finance (as opposed to being a universal solution for everything).

    Having a bunch of retirees chatting about their investing successes and failures “in the open” is probably risky but “risk” is what nobody in this area is addressing, right?

    Risk is the “800 pound gorilla in the room”, to quote an FI using the FUD (Fear, Uncertainty, Doubt) approach to retirement.

  5. @Jim:Here’s what I think FIs should ask re: risk:

    Which of the following statements best describes you:

    1) I skydive.
    2) I look both ways — twice — before crossing the road.

    Answer that for me and I’ll tell you if you’re risk adverse or not.

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  8. I think that most people seeking answers about their retirement finances realize that any detailed analysis is directly proportional to the information used to produce the analysis. The problem in many cases is that individuals often don’t have any idea as to where they stand. If their plans are sound, they want to spend hours providing detailed financial information to an adviser, just to be told, “Good job.” However, if they have some shortcomings, they are more than willing to invest the time and effort necessary for a complete analysis. This is where the simple calculators become effective — to indicate the likelihood of a problem.
    You are correct in that these calculators should not be used or marketed as a “full retirement analysis.” These calculators can be very effective in determining if an adviser should be sought and a detailed analysis performed.
    The reality is that people will not invest the time unless they think they have a problem. I agree with your recommended approach, but also the usefulness of simple calculators.

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