Why Financial Advice Changes Over Time

January 10, 2020
financial advice

Our recent episode, Financial Advisors React to Old Advice, was all about old advice we’ve given on the show that’s either changed or evolved. Why does financial advice tend to evolve or change over time? If someone’s advice changes frequently, does that make it less reliable?

People change, as does advice

Just like people, financial advice evolves and changes over time – and there isn’t necessarily anything wrong with that. All of us move through different financial stages of life at different paces. The advice someone gives in one stage of life may be different than the advice someone gives in a different stage of life.

Different stages of life

Financial advice, and financial habits, will be different depending on how old you are and what stage of life you are in. For younger people, they often need to spend less in order to meet financial needs and goals. On our most recent show, one of the biggest things that has changed is our “Tightwad Nation” mindset.

As you grow older and accumulate more and more retirement savings, money becomes a less scarce resource. Debts, such as student loans and mortgages, are getting paid down or paid off. You’ve likely advanced to a higher position in your career path, and are making a higher salary than you were in your younger days. When your disposable income is much higher, your attitude towards money will shift; you may be more willing to spend money on food, or dates.

As you enter retirement, depending on how much you saved before retirement, your spending may increase, decrease, or stay the same. The financial stage you’re at in retirement will determine your attitude towards money, and may shape your attitudes, beliefs, and advice about money.

Advice evolves naturally over time

Attitudes of the financial world, and the general public, change over time. 15 or 20-years ago, there may not have been enough free information available to successfully manage your own finances. Now, with the rise of the internet and YouTube, the bar for hiring a financial advisor has risen.

Index funds are becoming more and more commonplace in an investor’s portfolio. High-profile figures like Warren Buffett and Jim Cramer are big believers in index funds, and passive investing now controls nearly half of the U.S. stock market. Attitudes and advice regarding actively managed funds and stock picking has changed dramatically over the last several decades.

Advice changes naturally over time as people change, as society changes, and as the financial world changes. Consistency is important over time, but ideas and advice will naturally change given a certain length of time. Check out our most recent show on YouTube below to see all of our advice that has changed and evolved over time.


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