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Behavioral Finance

BY Nevin E. Adams, JD | 4/5/2023
The man who was instrumental in encouraging behavioral finance-focused default structures in 401(k)s now cautions that those defaults need to be “smart.” Speaking at the NAPA 401(k) Summit,... Read More
BY John Sullivan | 1/19/2023
"Am I investing in what will one day be considered among the craziest ideas in all of investing history?" Tulips, Beanie Babies, whatever—if you or your clients have ever had the thought, today is... Read More
BY John Iekel | 7/5/2022
Proponents of automatic features for DC plans have long argued that they boost participation and savings rates, and a recent study confirms that belief.  “Automatic enrollment in employer‑... Read More
BY Ted Godbout | 4/5/2022
“Auto everything” has solved a lot of problems, but the personalization required for decumulation strategies requires a different approach, Prof. Schlomo Benartzi suggested at an April 3 general... Read More
BY Nevin E. Adams, JD | 3/1/2022
Our industry often seems to treat participants like children who can’t make big decisions—but a recent research paper suggests they might make better choices if we expanded their... Read More
BY Ted Godbout | 2/24/2022
“Pennies” over “percent”? A new study finds that a simple change in information architecture, such as how the savings rate is framed, can lead to a significant boost in savings behavior among lower-... Read More
BY Judy Ward | 1/19/2022
In her feature article in the latest issue of NAPA Net the Magazine, Judy Ward outlines how behavioral finance has changed. “The first generation of behavioral finance is very focused on finance... Read More
BY Ted Godbout | 10/20/2021
A behavioral tendency known as “narrow framing” can lead people to make ill-advised financial decisions, but behavioral economist Shlomo Benartzi suggests there are steps that financial institutions... Read More
BY Ted Godbout | 10/15/2021
Amid ongoing investor unease, a new study suggests that advisors should pay increased attention to clients’ emotional biases through the lens of behavioral finance to help them engage in prudent... Read More
BY Ted Godbout | 10/6/2021
Over the past year, advisors have observed a more pronounced impact of behavioral biases affecting their clients, but they’ve also had success leveraging mitigation techniques.  In fact, even... Read More
BY Ted Godbout | 5/28/2021
While most Americans tend to show some form of behavioral bias, a new study finds that higher bias levels correlate directly with worse financial outcomes across a wide range of domains, from... Read More
BY John Iekel | 5/28/2021
Traditional approaches to finance and investment have had their day, said experts in a recent PSCA webinar, arguing that behavioral finance has changed the equation.  In “Investment Menu... Read More
BY Nevin E. Adams, JD | 4/13/2021
An important decision, made in minutes. No, that’s not retirement plan savings—though various consumer surveys have suggested that many spend more time mapping out their annual vacations than how... Read More
BY Ted Godbout | 10/15/2019
Being easily influenced by recent news is one of the most common behavioral biases that impact investing decisions, but helping clients overcome such bias remains an ongoing challenge.   That... Read More
BY John Iekel | 7/10/2019
Since employees and their behavior are at the root of most decisions about retirement plan participation and how individual accounts are managed, insight into behavior that affects those decisions... Read More
BY John Iekel | 5/22/2019
The fire and ice of dragons in winter. Leprechauns sitting in a pot of gold at the end of the rainbow. This is the stuff of mythology. But even the seemingly commonplace can incorporate a dash... Read More
BY Martha Menard | 12/6/2018
EDITOR’S NOTE: This is the second of a 2-part article on motivational interviewing by Dr. Martha Brown Menard, PhD, of Questis. Part 1 offered an introduction to MI and suggested the first three of... Read More
BY Ted Godbout | 12/5/2018
Even though individuals know what they should do about money, decisions can be deeply emotional and many times they have trouble overcoming resistance to act on those decisions. But a new white paper... Read More
BY Martha Menard | 11/29/2018
EDITOR’S NOTE: This is the first of a two-part article on motivational interviewing by Dr. Martha Brown Menard, PhD, of Qwestis. Click here to view Part 2.Most experts agree that communication skills... Read More
BY John Iekel | 10/9/2018
There are many factors that influence current and prospective plan participants’ choices regarding saving for retirement. A professor argues that advisors and others would do well to be mindful of a... Read More
BY Ted Godbout | 7/16/2018
A new study reveals a number of remarkable developments in plan design trends and participant savings behaviors among small business defined contribution plans.In Vanguard’s fifth annual “How America... Read More
BY Nevin E. Adams, JD | 10/17/2017
All too often the innovations honored with a Nobel Prize fly under the radar of “regular” Americans. But that wasn’t the case last week when the work of University of Chicago’s Richard Thaler was... Read More
BY Ted Godbout | 10/10/2017
American economist Richard Thaler, a pioneer in behavioral economics, has been awarded the 2017 Nobel prize for Economic Science.Thaler, currently with the University of Chicago, was a force behind... Read More
BY Steff Chalk | 8/31/2017
Uncertainty continues to brew in the land of the qualified retirement plan, as plan advisors weigh their options and consider changing to a new business model — all thanks to the shifting timelines... Read More
BY Kristen Berman | 2/14/2017
As the focus over the last several decades has been on financial education and literacy, an emerging body of behavioral economics research is illustrating how this approach has failed. The commonly... Read More