Avoid the Wrong (Mental) Shortcut

On Wall Street - To deal with information overload and process new information, people tend to create mental shortcuts, according to Deena Katz, associate professor in the Personal Financial Planning Division at Texas Tech University. When making decisions under uncertainty, these mental shortcuts, or heuristics, can sometimes take them down the wrong path.

Decision making is a major part of financial planning and the more advisors understand it, the better off their clients will be.

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To deal with information overload and process new information, people tend to create mental shortcuts, according to Deena Katz, associate professor in the Personal Financial Planning Division at Texas Tech University. When making decisions under uncertainty, these mental shortcuts, or heuristics, can sometimes take them down the wrong path.

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