We’ve all seen investors who struggle to stay the course — whether that’s because they act rashly in a downturn, get overly excited about a market fad, or unduly focus on recent performance history. Behavioral researchers have long since identified cognitive biases like overconfidence bias and recency bias that exacerbate these problems; now we’re increasingly discovering techniques that can help investors overcome (or at least avoid) them, as well.
Here, we’ll look at some of the options available to advisers and consultants, to help investors on their path. These lessons come from a guide that I recently developed with Dr. Sarah Newcomb at Morningstar on how advisers can apply behavioral science to their work; you can find the free guide here.
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