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“Loss Aversion” is a behavioural finance bias that which poses a giant problem amid market craziness for financial services providers, fund managers, platforms, networks, digital advisers and others.
💻 It’s a particular issue when customers are navigating the world of personal investment via portal-based financial services offerings, without the reassuring presence of an experienced adviser or other human input.
❓ Why? In short it triggers majorly self-sabotaging behaviour in clients/customers.
❗ This includes over-reacting (or under-reacting) to the information you give to customers/clients, depending on how it is presented. The net result: resentful customers, poor client retention and dwindling profits.
😱 What is it? Loss Aversion is the tendency to prefer avoiding losses to acquiring equivalent gains. It can cause investors to hold on to an investment for too long or not long enough, e.g. rushing to encashment or holding on to dud investments.
📉 Not surprisingly, investors who are highly susceptible to Loss Aversion can be triggered into bad decision making when markets seem “crazy” due to massive political and economic upheaval.
🤝 By integrating Wi-Ai Investor Personality Profiling software into an online process, financial services businesses can get ahead of the curve by identifying customers’ susceptibility to biases such as Loss Aversion and ethically preparing for the moment when their fears are massively triggered by market craziness.
🤚 To find out more, get in touch via [email protected]