‘It won’t happen to me’

Ask almost anyone in a room whether climate change poses a serious risk to society. I expect that most hands will go up, although it may depend on what newspaper the room reads. However, ask financial planners if they are recommending sustainable investment portfolios and many will say, I don’t have any clients who want them.

There are various reasons for this, some of which are rooted in human psychology. A meta-analysis recently published in Nature Sustainability (Sandlund, Bjälkebring & Bergquist, 2026) surveyed over 70,000 participants across 17 countries, asking people if they thought climate risk would affect their lives personally. In 81 out of 83 datasets, people rated their own personal climate risk as lower than that of others.

The researchers call this “overplacement” – a branch of overoptimism bias where people consistently rate their own risks as less likely and less severe than those of other people.

The ‘someone else’s problem’ effect

The research also reveals that people are more likely to discount their own risk when making comparisons at scale – against fellow citizens or humanity broadly. The effect weakens when the comparison is made closer to home: such as a neighbour, or someone in the same job. The more abstract the threat, the easier it is to park it elsewhere.

For those of us working in financial services, this has an immediate practical implication. Generic risk warnings do not move people. Vivid, specific scenarios do. “Climate change poses long-term risks to your portfolio” lands very differently from “the coastal property you’re planning to retire to is about to become uninsurable and unmortgageable – here is what that means for your plan in 15 years”.

It is worth asking whether we, as financial professionals, are susceptible to the same overplacement bias. Do we wait for the occasional client committed enough to lead on environmental issues to reach to that top shelf and get the sustainable portfolio down?

Climate-related financial risk is already prowling amongst us, transition risk, energy security risk, long-term insurability risks. These are not speculative concerns — they are already repricing in the market. Yet many advisers and the product providers that serve them continue to treat these issues as someone else’s problem for another day.

Beyond the crystal ball

“None of us has a crystal ball” is a phrase we reach for when the future feels too uncertain to navigate with confidence. But it can become a way of avoiding the deeper work: imagining, in specific terms, what could go wrong for this particular person, in this particular situation, within a realistic time horizon.

The research is clear that overoptimism reduces the likelihood of protective action. If a risk does not feel real and personal, the steps to address it do not get taken — whether that is taking out health insurance, reviewing portfolio fossil fuel exposure or considering if a retirement plan might be ignoring the impact of climate change.

What people often cannot do – without help – is genuinely inhabit an uncomfortable or uncertain future. That help is, arguably, one of the most valuable services a financial professional could offer: structured, evidence-based imagination. Not alarm. Not prediction. But the disciplined application of “what if this happened to you?”

See also: Urgency and agency

Breaking the bias

We are all operating with brains designed to focus on the immediate and the familiar. This evolutionary inheritance is one that our professional role requires us to actively work against, on behalf of our clients and in our own decision-making. Its more than telling our clients to focus on the long term, not the short term.

We may not have a crystal ball. But we have the research, the tools, and the professional responsibility to look harder at the road ahead – and to help our clients see what is on it, clearly and specifically. Time to prepare and adapt, this might be the greatest gift we offer.