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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Behavioural Finance in Practice

An investment adviser notices that a client keeps postponing the decision to start a monthly SIP even though she agrees it is suitable, and she repeatedly says she will do it 'next month'. Which behavioural tendency is this most closely related to, and which practical step from the adviser best counters it?

The client shows procrastination or inertia, and the best remedy is to automate the investment through a SIP mandate, starting small. Automation removes the repeated decision point, so action happens by default instead of being delayed month after month.

  1. AProcrastination or inertia; set up an automated SIP mandate with a small starting amountCorrect
  2. BOverconfidence; show her more past return data
  3. CMental accounting; split her money into several buckets
  4. DHindsight bias; ask her to review old decisions

Explanation

Repeated postponement of an agreed action is procrastination or inertia. Automating the investment through a SIP mandate removes the need for repeated decisions. The other options describe different biases and do not address delay.

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