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Cocktail Party Risk

October 13, 2021
Bryan Koslow
Home 9 Blog 9 Cocktail Party Risk
Closely aligned with FOMO (Fear of Missing Out), Cocktail Party Risk is the fear that you are not keeping up with others in your social circles. If you have ever attended a social event and left feeling diminished, you have probably experienced Cocktail Party Risk. Perhaps you listened to a friend talk about a home that you perceive as out of reach for you, or the conversations were about trips you wouldn’t allow yourself to dream of, or financial successes that you can’t imagine. Social media has made this risk more pronounced as we are now reminded daily of “how well” our friends are doing.  Subconsciously, we know that our online profiles present a distorted, masterfully curated version of reality. And yet, we cannot help but compare.

Cocktail Party Risk causes distraction and overwhelm. It lures us to focus on things that simply do not matter. You may have already allowed these feelings to keep you from moving forward with your plans. The comparison to others’ supposed success can make you believe that you are not ready or able to build financial success. Or, you may have made a mistake by taking an unnecessary risk (e.g., chasing the latest meme stock) and ended up in a more difficult position. Instead of comparing to others, take a step back and consider what financial success means to you.

There are two questions we always ask clients when we first meet. The first question is “what brought you here now?”Sometimes it is a life event (change of job, birth of a child, purchase of a home, etc.) that brings people to us. Others may have tried taking advice from parents or friends, googled financial topics, read a few personal finance books, and are now ready to engage a professional.

The second question we ask is “what are we trying to achieve?” Answers to this question vary greatly, but some of the more common themes focus on an outcome (I want to retire at 50), on a process (we want to know how much we should be saving each month), or performance (we want to earn more than we are getting in our high yield savings account).

The answers to these questions tell us so much about the people we are sitting with. Your journey so far is unlike anyone else’s. And so too is your path forward. That is precisely why your financial plan needs to be built around your values, not around what other people are saying or doing.

The best way to manage Cocktail Party Risk or FOMO is to create a financial plan that aligns with your values, goals, aspirations, time horizon, and risk tolerance. Learn what each of these terms mean, define your vision of wealth, and start building in The FIT Universe.