Most Clients Feel Guilty About Their Spending. Should They?

Do guilty pleasures really need to feel so … guilty? 

Nearly three-quarters of consumers feel remorse about spending on joy rather than investing in other financial goals, according to Ally Bank. While more acute for younger generations, guilt is still prevalent among retirees; advisors who discuss those reactions can not only help clients align their spending and values so that they enjoy their purchases but also differentiate themselves from competitors.

“Our job is to help our clients feel good about their financial situation, and if your clients are living in a world where there’s guilt associated with action, or fear, or stress, we’re not doing our job,” said Sofia Figueroa, an advisor at Ellevest. Plus, having these conversations is a great way to actually get to know your client. “It really allows you to curate your guidance towards what matters to them, and that’s what creates a sticky relationship.” 

Permission Slip 

Sometimes, telling people it’s OK to spend can actually attract a client. Bryan Byrer, founder of Millennial Financial Planning, was discussing spending with a prospective client who, after a parent’s early death, decided to invest in her health and was spending about $150 per month on fitness and nutrition programs. She said something like, “I know that’s too much to spend,” opening a conversation about her values. “I don’t want my clients, at least if they can legitimately afford it, to feel like this thing that helps them live out their values is actually bad,” Byrer said. “That’s actually one of the ways that she ended up becoming a client. She said, ‘I’ve never had anyone say it’s OK for me to spend on myself.’” 

More findings from the survey: 

• Women are more likely than men to feel guilty about spending on joy, with 75% feeling at least some guilt compared with only 68% of men. The gap is even more pronounced among those who feel a lot of guilt, with 25% of women reporting that reaction and only 15% of men. 
• One culprit behind the feelings of guilt may be the lack of a dedicated joy budget. Although 68% of respondents reported spending on joy monthly, only 39% actually budgeted for it. 

Old Dogs, New Tricks. Baby boomers are least likely to feel guilty about their spending, but more than half still do. That makes sense after a lifetime of saving, Figueroa said. “We’re talking about decades of the same repeated patterns and behavior. That is not going to change overnight,” she said. For those clients, it takes repeated conversations about how their drawdown strategy is actually cautious to get them to begin to feel good spending. Having these talks early on helps. “I’m actually having those conversations preemptively to try and mitigate some of that need for intense behavioral shifts down the line,” said Figueroa.