Advisors who run successful RIA firms have mastered the art of making smart business decisions amid suboptimal conditions and external pressures in the wealth management industry. This is a rapidly evolving industry, and RIAs find themselves under constant pressure to innovate and respond to competition while growing assets and profit margins.
When it is time to act, RIA leaders need to be able to trust their instincts, but not without a healthy dose of self-awareness and understanding of their own inherent decision-making biases. Though advisors may not be able to avoid bias entirely, they can recognize the common biases and help mute the effects.
The ‘Rush to Act’ Bias
The ever-evolving wealth management industry can leave some RIAs believing they are required to respond or react immediately to every competitor business decision or news headline. While many great leaders make decisions quickly and decisively, no one should rush to act without correct or adequate information. An RIA owner's overconfidence or false confidence can trigger a misplaced sense of urgency and result in devastating consequences. That can have negative effects on a firm's bottom line or reputation.