• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>How to Break Through Clients' Cognitive Dissonance

Related Content

  1. Videos
  2. Articles
  1. Financial-Planning Tips for Military Service People

    Ed Slott discusses some retirement and tax-planning exceptions available to active and retired military service people.

  2. A Tricky Choice: Who Gets Your IRA ?

    IRA expert Ed Slott discusses the pros and cons of leaving an IRA to a spouse, children or grandchildren, a trust, or a charity.

  3. Why 70 Is the Pivotal Age for Retirement Planning

    For retirees , everything changes when they must begin tapping their tax-deferred retirement accounts , says retirement expert Ed Slott.

  4. 'Backdoor' Roth IRA May Be Closing for Investors

    Those who are interested in this maneuver should be aware of the stumbling blocks and understand that its days are probably numbered.

How to Break Through Clients' Cognitive Dissonance

Clients will go to great lengths to rationalize a past decision, even when a better solution is needed.

Michael M. Pompian, 05/19/2016

This month's article is the 16th in a series called "Behavioral Finance and Retirement," which is intended to provide insight to advisors on the unique needs and financial behaviors of clients who are entering that period of transition called "retirement."

I put retirement in quotation marks because people today are not retiring the way they used to. The days of the retirement party, the gold watch, and sitting out one's years doing crossword puzzles and watching "Wheel of Fortune" are over for most people.

We've all heard the analogy that the baby boomers are like a baseball going through a garden hose. Well, the baseball is getting to the end of the hose, and it's not leaving without a bang! And before it leaves, it will be a financial force to be reckoned with.

To serve retired clients properly, there are some key themes that advisors need to be aware of:

1. People are living longer than ever thanks in part to medical technology and better living habits such as diet and exercise. This is extending the length of time people are in a nonworking phase of life.

2. People's definition of retirement is changing, which is having a major impact on how individuals manage their finances.

3. In some cases, a certain segment of the population will have no choice but to produce some type of income after they leave the traditional workforce.

4. The responsibility of planning and investing for retirement has shifted in large part to the employee/retiree and away from corporations. As a result, behavioral biases significantly affect individuals who are entering or already in this phase of life.

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.