Home Bias: Debiasing Techniques From Financial Planners’ Perspectives

Abstract

Financial planning literature has called for further efforts into understanding investor psychology. Financial planners have the capacity to enhance investor welfare through mitigation of behavioral biases. Thus, the perspectives of financial planners are an important voice in behavioral finance research. Research suggests that home bias remains prevalent and problematic. This research applies a qualitative, thematic analysis approach to understand how home bias has been practically managed by professional financial advisors, with data collected from financial planners in South Africa. Results suggest that strategies such as investing time in educating the client and using probing questions to nudge the client in the right direction were effective. Irrespective of the bias mitigation approach adopted, a strong relationship of trust is foundational to any debiasing activity.