PFP2515. The Surprising Importance of Optimism in Financial Planning

Optimists are healthier, live longer, and have more meaningful relationships, but do optimists save and invest differently than pessimists? Results from a new survey reveal a surprisingly strong relationship between optimism and a range of investment behaviors, suggesting that a positive mindset may be a more important trait than other client characteristics, including risk tolerance. This session will review the research on dispositional optimism and explain how advisors can use behavioral techniques to effectively motivate clients and help them manage risk. The session will also delve into new research on overconfidence and explain the difference between a positive mindset and overoptimistic beliefs.

Learning Objectives:

• Recall the concept of dispositional optimism.
• Recognize how optimism affects goal formation and attainment.
• Identify how to leverage optimism in client communication.
• Recognize overoptimism and how it leads to suboptimal choice.