Financial Advisors: Here’s How Market Volatility Impacts Investor Psychology

Humans either think that they’re in charge of what happens in their life, or they believe that life happens to them. Those who believe they’re in control of their life and its outcomes have an internal locus of control.

Having an internal locus of control tend to be associated with higher wealth, and because these people are more likely to take responsibility for the outcomes in their life. Additionally, the top one-percenters are also more likely to believe in their own abilities to solve problems and achieve goals, make better investment decisions and react more calmly when volatility strikes.

Having an external locus, however, is associated with self-destructive financial behaviors.

Financial advisors can help clients move to a more centered approach by asking thoughtful questions about past financial decisions, and can assist in determining where a client’s locus of control lies.

— Read on finance.yahoo.com/news/how-to-advise-your-clients-when-volatility-strikes-163641016.html

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