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« Light Switch Thinking | Main | Some Fresh Insights -- and Some Questions »

August 02, 2010

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oldprof

Andrew -- Thanks for pointing out this important reference. It definitely captures an issue that I feel whenever talking with clients. I am honest by nature, and have plenty of disclosure on this site. I understand that this is not the best way to sell.

Thanks for the comment.

Jeff

Andrew McCauley

An interesting article in New Scientist (6 June 2009) titled Why Cocky Pundits Prosper, highlights academic research on the relationship between confidence & the purchase of advice.

The research, by Don Moore of Carnegie Mellon University in Pittsburg, Pennsylvania, shows that we prefer advice from a confident source, even to the point that we are willing to forgive a poor track record.

Sounds familiar! This line of thought is consistent with plausibility being related to authority rather than evidence. I posit that in terms of financial market advice, confidence & authority play a significant role.

To paraphrase the New Scientist – So if honest advice risks being ignored, what is a responsible financial advisor to do?

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