REGRET aversion
‘Investors reluctant to acknowledge mistakes to avoid feeling bad ’
‘If you haven’t made a decision, you haven’t made a mistake’!
Once someone commits to a course of action, it’s not uncommon to immediately experience feelings of discomfort. Was it the right decision? Should I have chosen another course? And so on. These feelings are natural and should be considered when discussing the pros and cons of different strategies.
action
Here are some of the ways you can mitigate this aversion:
- As you consider different retirement strategies emphasise which aspects can be changed or reversed in future.
- Provide plenty of time for people to consider the options. The less pressure they’re under to make a decision, the more comfortable they are likely to feel when they finally decide.
- Remind clients that they have a cooling off period. This will also encourage them act decisively without experiencing regret.