Beliefs, Preferences, and Biases Investment Advisors Should Know About
Excerpt:
Financial advising is a prescriptive activity whose main objective should be to guide investors to make decisions that best serve their interests. To advise effectively, advisors must be guided by an accurate picture of the cognitive and emotional weaknesses of investors that relate to making investment decisions: their occasionally faulty assessment of their own interests and true wishes, the relevant facts that they tend to ignore, and the limits of their ability to accept advice and to live with the decisions they make.
Source:
Daniel Kahneman, Ph.D., Eugene Higgins Professor of Psychology, Princeton University, Woodrow Wilson School of Public and International Affairs, Robertson Hall Princeton, NJ 08544-1013 and Mark W. Riepe, Vice President Investment Products and Mutual Fund Research Charles Schwab & Co., Inc., The Schwab Building, 101 Montgomery Street, San Francisco, CA 94104
