We have seen in this study how even the best intentions to behave in a rational way are rarely enough. Rational behaviour fails us and emotions further confuse us, especially when applied to finance. This irrationality can be seen in a range of scenarios, from our focus on the short term, through narrow frames of reference, to a tendency to take more action than needed.
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The research found this action bias most detrimental in the trading paradox. A substantial proportion of high net worth individuals believe that active trading is the key to financial success, despite evidence to the contrary. Paradoxically, the belief that frequent buying and selling is beneficial is held by those who, at the same time, admit they trade too much for their own benefit.
These hidden influences can result in both financial loss, as in the trading paradox, but also emotional loss. We found that even those high net worth individuals who were aware of these biases and wanted to control them with a more disciplined approach, were actually less financially satisfied.
The unparalleled spectrum of wealthy individuals that we spoke to for this project allowed us to uncover a range of personality types. We found that those who were most susceptible to failing to control their financial biases were those with a low level of composure, those who were vigilant about preventing negative events, and those who had a large appetite for risk.
Across the countries covered, we found one common trait amongst the high net worth individuals - the Zen of Ageing. This suggests that as the wealthy get older, they develop an attitude of calm, acceptance and satisfaction to their financial lives.
For those who struggle to find this calm, there are a number of strategies that can be used to mitigate some of the hidden biases in our lives. The most common strategies amongst the world's wealthy are the involvement of other people, removing temptations, and becoming more structured with self-imposed rules and deadlines. For those who desire more discipline in their financial lives, the use of these strategies is linked to both emotional and financial gains.