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Russell Investments and Fidelity both see disconnect between HNW investors and RIAs in separate studies

Mere millionaires prefer fixed income and ultra-wealthy Tiger 21 members also edge toward perceived sleep-at-night investments

Author Lisa Shidler June 23, 2011 at 2:32 PM
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Kristin Gibson: Clients will really force your hand out of fear.

Women of Wealth Management

Elmer Rich III

Elmer Rich III

June 24, 2011 — 4:12 PM

This is a huge, growing problem and threat to advisors — clients engaging in self-harming investment behavior. Brain science and the advanced social sciences have PROVEN that our instincts, reactions and emotions are unerringly bad guides to long-term investing and protecting our own assets. The same is true for professionals as well.

All professionals, including attorneys, accounts and doctors now face this same critical problem: – The client (patient) does not follow the best professional advice – The client insists, often, on doing the opposite recommended by the professional (as this article points out) – Based only on some current emotional moods — mainly fear – However, when and if bad results happen, the advisor is blamed and sometimes sued

So the advisor ends up in legal jeopardy because of client’s “irrational,” usually fear-driven, behaviors. As clients age both their susceptibility to these mistakes and self-harming investment behaviors and the consequences get worse.

In fact, there are ways to address these behaviors and the psychology driving them. We can learn from other professions. We post on this topic regularly. As marketers, we have studied this problem for years and are experts in the topic. It complicated but remedial action can be taken by advisors. Here are some recent posts on the topic:

“Can One Bad Investment Experience Cause Lifetime PTSD and Scaring? Sometimes” —http://wp.me/p167Bf-9P

“Why Smart People Defend Bad Ideas” — http://wp.me/pXvvI-ac

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Mentioned in this article:

Russell Investments
Top Executive: Jennifer Tice

Savant Capital Management
RIA Serving Endowments/Foundations
Top Executive: Brent Brodeski, CEO

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