The Ostrich Effect
The Ostrich Effect
The ‘ostrich effect’ is the decision to ignore dangerous or negative information by “burying” one’s head in the sand like an ostrich.
Research suggests that investors check the value of their investments & superannuation funds significantly less often during bear markets.
Investors “put their head in the sand” to dodge facing their financial portfolios when they're expecting bad news.
We also see this often with clients who come to us after years of dodging debt collectors. Many people often “bury their head in the sand” to dodge facing their poor financial choices of the past. When they finally pull their head up, often they need expert advice & support to get them a solution to their problems they have been dodging.
A few years ago, we had a client in his 50’s that had limited assets (no house, no car, with $300,000 in super), that had over $300,000 in unsecure debt.
After a divorce & poor financial decisions, they had managed to rack up an enormous debt with financial institutions and family members.
They had been “burying their head in the sand” until that family member passed away and the estate came knocking.
We were able to support the client with an actionable plan providing them with a solution that would not only get their hand out of the sand, but also be able to look to the future and start planning to be more financial responsible coming into retirement.
I will never forget that day, that the client said
“Matthew, thank you for your help.
Because of your advice & support, it feels like the noose that was hanging around my neck has been lifted. I feel free.”
As a financial planning industry we can get a bad rap for indiscretions of the past & the practices the large banking institutions adopted. However, many financial planners do not push products. The great financial planners are problems solvers and they look to solve your financial problems & financial plans.
This is why the team at Newcastle Advisors loves being a financial planner, the fact that we can use our knowledge and experience to help people and positively impact their lives.