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. I review the research on dispositional optimism and explain how advisors can use behavioral techniques to effectively motivate clients and help them manage risk. I also review new research on overconfidence and explain the difference between a positive mindset and overoptimistic beliefs.