With the introduction of the concept of anchoring, Tversky and Kahneman opened the door to a new way of thinking about and addressing the financial decision-making process. For more than four decades, subsequent research has expanded upon their idea. Yet, plan sponsors and participants continue to remain uninformed of the dangers of anchoring.
Tag "Anchoring"
With a GOT-based strategy, expectations are predicated on needs, not the happenstance of the market. GOT-based portfolios may not have the record-breaking excitement of market indices, but it’s slow-and-steady-wins-the-race philosophy may lead to a more comfortable retirement.
Employees base their decisions – both good and bad – on even the smallest cues, and that only increases 401k plan sponsor fiduciary liability.
Here are three easy practices a 401k plan fiduciary can implement to avoid one of the common investing mistakes identified by researchers in the field of behavioral finance.
