Availability bias
‘Judgments based on how easily an example or instance comes to mind’
People are often inclined to take mental shortcuts. If they’ve read, seen or heard something that they can easily recall this can colour their judgement. Statements like George Osborne’s ‘no one need ever buy an annuity’ may be recalled as evidence that annuities are poor value. This isn’t about recommending annuities over drawdown, but simply shaking prejudices that can lead to poor decisions.
action
- Combat rash judgements with data and facts.
- Take it seriously. It’s likely to be raised again if you don’t.
- Try visualisation. For example, ask clients to recall how they feel when their investments fall in value as an entry point to discussing annuities.
- Think of a dramatic fact. This can supplant the heuristic they started with.
There’s more information abut positioning annuities under the behaviour called ‘framing’.