Behavioral Biases of Financial Planners: The Case of Retirement Funding Recommendations

Vishaal Baulkaran and Pawan Jain

Journal of Behavioral Finance, 2025, vol. 26, issue 3, 303-316

Abstract: We examine whether financial planners display common behavioral biases and whether these biases affect their recommendations for various home equity release options to fund retirement income. First, we show that different factors explain different behavioral biases. Second, we show that different behavioral biases affect financial planners’ comfort level and recommendations for various options to fund extra income during retirement. For instance, female planners, planners with advanced degrees and those from non-bank institutions display less mental accounting bias, while older and high-income planners display lower loss aversion. Specifically, our findings reveal that biases, notably mental accounting and herding, influence planners’ willingness to recommend home equity utilization. Furthermore, these biases significantly affect the ranking of retirement income strategies. Planners exhibiting mental accounting or gambler’s fallacy prioritize selling investments, whereas those with loss aversion lean toward selling and downsizing. Our findings have important implications for financial planning and advising practices as they illuminate the nuanced interplay between planner biases and advisory practices in retirement planning.

Date: 2025
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DOI: 10.1080/15427560.2024.2305412

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