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In the 1940s, 90 percent of the stock market was owned by individual household investors. Today, with the widespread use of investment banking and mutual fund investing, individuals are responsible for trading only 20 percent of U.S. corporate equity.1

Do we no longer trust ourselves with investment decisions? You might think that, with so much information now accessible via the internet, more people would invest on their own. However, the fact remains that there’s really too much information now available, much of it from unreliable sources, and very little can be tailored specifically to individual financial situations.

That’s where we come in. Our job is to help you determine a mix of investment and insurance options for your financial goals, timeline for retirement and tolerance for market risk. Together, we can take this world of information and create a financial strategy designed to help you work toward your financial goals.

Interestingly, one of the hottest areas of research in recent years is behavioral finance. This is basically the study of why we make the investment decisions we do. But regardless of the reasons, this knowledge doesn’t necessarily change our decision-making style. Our decisions are reflections of who each of us is; perhaps they reflect our values, but just as often they may reflect our dispositions (which may not always be a good thing).2 This is another reason having an experienced financial advisor to run ideas by can help ground decision-making and keep us focused on long-term goals.

While biases may be inherent to our nature, it’s still a fascinating field to help us understand everyday behaviors of which we may not be aware. For example, one consultant got a firsthand look at natural human behavior when she underwent two hip surgeries. Over time, she relied on two crutches, one crutch and then a cane. During this time, people were far more willing to help by holding doors and carrying things for her when she was using a crutch as opposed to a cane. It’s worth considering how this bias reflects our feelings toward people with disabilities that appear temporary versus permanent.3

By the same token, we tend to make poor decisions when we’re under stress. One researcher explored this concept within the context of poverty: People living in impoverished conditions with constant financial stress tend to lack the capability, or “mental bandwidth,” to make better choices.4

Perhaps understanding our bias tendencies can help us recognize why other people make what we may judge to be consistently poor decisions.


Content prepared by Kara Stefan Communications

1 Michael Kitces. Nerd’s Eye View. Dec. 21, 2016. “How Behavioral Biases Lead To Hard-To-Capture But Sustainable Alpha.” Accessed Jan. 24, 2017.

2 Shana Lebowitz. World Economic Forum. Nov. 25, 2016. “Why is it so hard to overcome bias in decision-making? Because you’re human.” Accessed Jan. 16, 2017.

3 Allison Rimm. Harvard Business Review. Dec. 30, 2016. “What I Learned About Helpfulness When I Used a Cane Instead of Crutches.” Accessed Jan. 16, 2017.

4 Knowledge@Wharton. Dec. 28, 2016. “Why Mental Bandwidth Could Explain the Psychology Behind Poverty.” Accessed Jan. 16, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.  

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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