I usually look forward to long plane rides as an opportunity to catch up on some reading. And so it was on a recent cross-country trip. I was concentrating on my reading, only barely aware of a couple who looked to be in their mid-to-late 50s in the two adjacent seats reading newspapers. The newspapers were spread wide and crinkled often. As more time elapsed though, something just didn’t seem to add up. It was my knowledge that as the hours passed on by, they continued to read and exchange sections of USA Today.
Now I enjoy sitting down with a cup of coffee and my Wall Street Journal — even for a leisurely while, time permitting. Without wanting to sound like a newspaper snob, how can someone read USA Today for two whole hours? It’s a pretty thin paper. The crescendo of tension that mounted with each crinkled page at last released when my neighbor — with whom I had not previously exchanged any words — put down her paper and very sweetly said: “By the way, you’re welcome to read the paper if you’re interested. I’m done.” To which I replied: “I appreciate the offer, but I actually have my own Wall Street Journal with me.”
She let out a gasp indicating how impressed she was and asked if the Journal’s stock tables had more information than her paper. We got to talking and I learned that neither I nor my interlocutors had gone completely mad — they were not reading each short article for a duration of two hours; in fact, they were both combing the fund tables. Apparently, Mary had just switched jobs, had a new 401(k) plan and with the help of her husband John was simply trying to determine which would be the best fund to place her retirement contributions. She wondered if her city-slicking, Wall Street Journal-bearing friend might have some useful knowledge to impart.
Ironically, I was on my way to the Retirement Income Industry Association’s annual conference to present an award for applied retirement research to Wharton professor Olivia Mitchell (featured in our ‘Retirewent’ cover), so the topic was very much on my mind. In fact, I was reading some of Mitchell’s research while my neighbors were reading the fund tables. The couple had told me that all the funds “seemed pretty much the same over the past 10 years” and that they were thinking of including bonds along with stocks for their first time ever. (I pointed out that the past 10 years were the worst for stocks in the more than 200-year history of the U.S. stock market.)
The couple’s analysis put me in mind of what Mitchell describes as the “naïve heuristics” — the lack of well-ordered investment and risk parameters — that plan participants apply in making financial decisions. I do not have this couple’s contact information for you, but I can offer you an important reminder of the value you bring to a society that is so lacking in financial literacy. People are living financial lives that they do not understand. Financial advisors can justly see themselves as the financial literary brigades on a lifesaving rescue and recovery mission.