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

Which technique is most consistent with using 'nudges' to help a client who procrastinates on retirement saving?

Setting up an automatic monthly SIP with a scheduled step-up is the nudge. It turns inertia into an advantage by making saving the default, removing repeated decisions and reducing the impact of procrastination and self-control problems on retirement accumulation.

  1. ASetting up an automatic monthly SIP with a scheduled step-upCorrect
  2. BSending a long technical report once a year
  3. CTelling the client to save whatever is left at month end
  4. DAsking the client to time lump sum investments after market corrections

Explanation

Nudges use default and automation to harness inertia in the client's favour. An automatic SIP with step-up removes the need for repeated decisions. Saving what is left, timing the market or sending dense reports depend on willpower and judgement, which procrastination undermines.

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