In the majority of cases I think it’s wishful thinking to presume they can. You simply can’t save people from themselves, and saved from themselves is exactly what the typical individual investor most needs. People’s actions and the opportunities they perceive are determined by beliefs, perceptual biases, and filters; created by each person’s peculiar combination of nature and nurture. Without addressing those psychological determinants any changes are likely to be only temporary and even the best advice is likely to be ignored in practice. People have to be ready to hear something before it can ever take hold. For those already headed in the right direction some sound advice can certainly help the process along, and once in a long while even turn someone’s financial life around; but for the rest it proves only a momentary diversion before resuming their previous trajectory.
Too many people are looking for an easy way out. When I’ve asked what they thought a “decent return” would be, I’ve lost count of how many people indicated a number of 30% or more. It’s no wonder 30% is the magic number for stock swindlers, and it’s no wonder people aren’t interested in a truly risk-free, guaran-damn-teed 20% from paying off their credit cards. It’s just not good enough to get them where they want to be without sacrifice, and sacrifice simply isn’t acceptable.
The painful truth is the one thing that makes the biggest difference to people’s future financial well-being, and virtually the only thing over which they can have significant control, is how much they spend each month. But that isn’t glamorous or exciting. For too many people, spending the most money they can equals fun, happiness, and the good life. Correcting that largely erroneous belief is probably the best gift that anyone can give. The average American has only a few thousand dollars in retirement savings. No matter what the goals, even the best financial advice and perfect foresight are rendered worthless without the self-control and vision to save for the future.