Behavioural studies show investors can make all sorts of mistakes under pressure, so how can advisers help their clients avoid such pitfalls? Dan Brocklebank offers some suggestions
The image of the swashbuckling trader who steps into the fray and wins big while others are panicking has almost become a cliché. The reality, however, is usually far less exciting. In fact, when there is any ‘excitement', it often comes from poor decisions. Behavioural studies show that all sorts of things can go wrong under pressure - our survival instinct kicks in, our time horizons narrow and we focus on avoiding pain rather than maximising long-term reward. So, how can you help your clients avoid falling into this trap? 1 Get the timing right It starts with taking a long-term ...
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