On a train journey back from London a little while back, I remember having a chuckle to myself whilst reading a story about goats addicted to licking the wall of a dam in Gran Paradiso National Park in northern Italy (1), apparently addicted to the salt and minerals which are present in the rocks.
A little googling suggests that many scientists mark goats as being equal in intellect to dogs. (2) This makes the death defying choice to lick a salty rock, hundreds of feet up in the air on a near vertical dam wall, even more interesting.
Now, bear with me on this train of thought, but it led me to think about other interesting behavioural traits. In my line of work a natural comparison to make was to the behaviour of people who invest their money in to pensions.
For many people, most in fact, a pension fund will be the second biggest asset of value that they own beyond a property. For some, it may be worth more than their property. These assets not only benefit the owner during their lifetime, but also their partner and now even children thanks to the much changed pension death benefit options.
So why, with such a valuable asset, would investors take such great risks like the goats in northern Italy?
Why allow an insurance company to take a charge of up to 5% of each contribution you make? (3)
Why leave your money in a so called “managed fund” that charges higher fee’s than most specialist and actively managed funds and certainly many more times higher charges than tracker funds (4), which ironically, many of the insurance company managed funds simply replicate the performance of?
Why not allow yourself the flexibility to take your pension benefits in a way that suits your lifestyle, circumstances and tax position or worse still, upon your demise, not allow your loved ones to benefit from your hard saved pension fund in the most efficient way?
Imagine still, worse of all, that in this day and age, you didn’t even have access to look at how well (or not) your pension fund was doing online, or track its performance or monitor costs and charges.
It would seem, given the choice, you might well act to avoid these pitfalls. However, we humans, much like the aforementioned goats, are hooked on the simplicity and routine, so we continue to save into these old fashioned, risk packed pension schemes. Zurich’s flagship Managed Pension Fund has over £12billion pounds of investors’ money invested in it (5).
Speaking to an independent financial adviser can quickly highlight these issues and scarily, probably many more… but fear not; solutions are abundant and easily and quickly achievable.
Advice has a value and a cost, but doing nothing, could prove to be far more expensive in the long term.
As for the goats, I’ll certainly not be chasing them up the dam to warn them of the dangers of their love for a salty rock.
For a free, no obligation initial chat about your individual finances, call Darren McKeever on 080001128250, email [email protected] or visit us on www.wwfp.net.
About the Author / Peter McGahan
Peter McGahan is Chief Executive Officer of Independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority.
