What's the problem with uncertainty? Helping clients on their journey

Helping clients deal with uncertainty on their investment journey

clock • 4 min read

It is rational to have moments when clients find themselves scared or anxious, the challenge is how we then manage those emotions, reactions, and decisions. Louis Williams shares his insight...

The certainty effect coined by Kahneman and Tversky in 1979 explains how we have a strong desire for certainty and therefore prefer to choose a sure or certain gain over a risky one. For example, if given two options, option A where there is 100% chance to win £900 or option B, 90% chance to win £1,000 and the remaining 10% chance of receiving nothing, then the majority of us (about 80%) opt for option A, because it is guaranteed that we will be rewarded. We choose clarity over chance even if this means we make decisions that lead us to be less financially profitable. Interestingly...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Your profession

AJ Bell calls on govt to merge cash and stocks and shares ISAs

AJ Bell calls on govt to merge cash and stocks and shares ISAs

The merger would be the first step in achieving a single ‘One ISA' regime

Valeria Martinez
clock 15 July 2024 • 2 min read
Premier Miton confirms MPS launch timeline

Premier Miton confirms MPS launch timeline

Group also reported AUM up 8% since opening position

Jen Frost
clock 15 July 2024 • 2 min read
Advisers urged to keep client communications simple and intuitive

Advisers urged to keep client communications simple and intuitive

‘This becomes more important over time as their life changes’

Isabel Baxter
clock 15 July 2024 • 1 min read