How Investor Emotions Affect Returns

A short animation showing three charts explaining how investor emotions undermine returns by as much as 2%

Investor emotions can have a detrimental effect on portfolio performance, according to a study by The Embark Investor Confidence Barometer:

  • Impulsive decision-making can result in an annual loss of 2%.
  • 45% of financial advisor clients have “strong opinions” on investment allocations.
  • 63% of advisors say they are “regularly” surprised by the choices their clients make about their investments.
  • 47% of advisers say that their clients’ biggest mistake is allowing the news to influence them too much.
  • Two-thirds of clients say an advisor is helpful for avoiding knee-jerk decisions.