FINANCIAL advisers have warned that more and more people believe they can rely on crowdfunding platforms like GoFundMe or JustGiving if their lives are turned upside down by serious life events such as critical illness that require expensive treatment.
They refer to the trend as a “dangerous gamble” and urge people to take responsibility for themselves and their families rather than rely on “lazy self insurance” that is “morally bankrupt”.
Successful GoFundMe and JustGiving campaigns can attract a lot of publicity, experts say, but there is a risk they draw attention away from the fact that many campaigns do not raise the money needed, with the result that people and their loved ones are often left vulnerable and exposed.
Complacent
Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management, warned: “While platforms like GoFundMe can be brilliant and powerful, they are causing people to become even more complacent about what might happen in the event of illness or some other life event.
“More and more clients we speak to say that they would rely on platforms like GoFundMe if they became critically ill, but in reality that’s a failure to take on any responsibility and also ignores the fact that treatments can cost tens or even hundreds of thousands of pounds, money that you simply cannot rely on family and friends to deliver.
“We are increasingly in a culture where too many people leave problems to others to sort out rather than take responsibility themselves.”
Plan A
Craig Fish, Director at London-based Lodestone Mortgages, is also worried by the trend. He said: “It genuinely worries me that some people may now see platforms like GoFundMe as a substitute for proper protection. Crowdfunding can be incredible in a crisis, but it should never be Plan A.
“When taken at the right time, with the right advice, life cover or critical illness protection can cost less than a takeaway each month. We’re often talking £20-£30 to properly protect a family. What concerns me is the mindset shift. Relying on the goodwill of others instead of taking personal responsibility is a dangerous gamble.”
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, took a similar stance: “Relying on a digital begging bowl for a critical illness or a funeral isn’t heartwarming, it’s poor financial planning. Life and critical illness cover exist for these exact catastrophes.
“Yet, instead of paying a basic premium to protect our families, we expect the guilt-tripped generosity of acquaintances to bail us out. It’s bonkers. At this rate, what next, busking for your car insurance renewal? Stop treating inevitable life events like a crowdfunded startup.”
Simply not on
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, is nonplussed by the way some people prioritise their finances: “Where there is genuine hardship, that is another matter and platforms like these can serve a useful purpose. But when I see people spend nearly £200 per month on their TV package but nothing protecting themselves or their family, it does make me question the notion of individual responsibility.
“No one sees the benefit of insurance until it happens to them. By that time it is usually too late. Asking others to help in a situation you could and should have made provisions for is simply not on.”
Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, said relying on the platforms as a substitute for protection is dangerous: “When the chips are down you may realise that people don’t dig deep in their pockets for you. This is especially the case during leaner times, and times are still fairly lean for many households.
“Control your own fate. GoFundMe, Just Giving and others like them are not sensible replacements for protection and insurance. If you have a major life event, you want the certainty that money is on the way.”
Picking up the tab
Michelle Lawson, Director at Fareham-based Lawson Financial, said people need to take responsibility for the life events that will come their way: “Crowdfunding platforms are another example of people expecting others to pick up the tab for their irresponsibility. The amount of donations by some individuals equate to more than the monthly premium of the person asking for help.
“Protecting you, your family and your assets should be the responsibility of you only and not the general public’s donations. This is just lazy self insurance.”
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, agreed: “Crowdfunding platforms are, in effect, the modern equivalent of passing the hat around the village. People tend to focus on the headline success stories — “they raised £80,000 in 48 hours”, for example — and ignore how many campaigns never hit their target.
“Insurance exists precisely because life’s big financial shocks are lumpy, time critical and emotionally incapacitating. A protection policy is a legally binding promise that is not dependent on whether strangers are in a generous mood that week.”
Chocolate latté
Simon Bridgland, Broker at Canterbury-based Charwin Private Clients, said people need to look in the mirror: “Most people have a choice of what they spend their money on. If an individual feels they would rather down a vanilla double chocolate latté every day rather than insure themselves and their family, then quite frankly they should be looking in the mirror and slapping themselves, swiftly.
“A coffee tastes great in the morning but it won’t rebuild your life. So expecting to hold out a hand and have it filled with others’ generosity because you felt insurance was a waste of your resources is morally bankrupt.”
