• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>The 5 Biases of Independent-Minded Investors

Related Content

  1. Videos
  2. Articles
  1. Fourth-Quarter To-Dos for Retirees

    Medicare enrollment, required minimum distributions, and fixed-income risks are just a few of the items retirees should check before year-end.

  2. Reform Brings Student Loan Relief, But Debt Still Weighs

    Student-lending rates this fall will be lower than they were previously, thanks to a deal recently struck on Capitol Hill, but millions remain in default.

  3. Benz: 5 Tips for Your Third-Quarter Portfolio Checkup

    Beyond noting their stock/bond split, investors should also check their small-cap exposure, overall rate sensitivity, and vulnerability to the wealth effect.

  4. Bond Funds Undergo a Stress Test

    Senior fund analyst Eric Jacobson walks us through how some of Morningstar's top-rated intermediate-term bond funds fared during the early summer sell-off.

The 5 Biases of Independent-Minded Investors

Overemphasizing data that confirms your beliefs and over-reliance on readily available information top the list.

Michael M. Pompian, 09/18/2014

This month's article is the ninth in a series called "Deep Dives Into Behavioral Investor Types." This series is intended to help advisors create better relationships with their clients by deeply understanding the type of person they are dealing with from a financial perspective and being able to adjust their advisory approach to each type of client.

As we learned in the last series, there are four behavioral investor types, or BITs: the Preserver, the Follower, the Independent, and the Accumulator. As noted in previous articles, the learning process for each BIT will be a series of three articles:

1. Part I will be a diagnosis of each BIT and discussion of its general characteristics.

2. Part II will be a deep dive into the biases of each BIT.

3. Part III will be how to create a portfolio for each BIT.

This article is Part II of the Independent BIT.

 

As previously reviewed, the biases of Independents tend to be cognitive--relating to how people think--rather than focusing on emotional aspects--relating to how they feel. The biases of the Independent BIT are confirmation, availability, self-attribution, conservatism, and representativeness.

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.