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Status Quo Bias

Kent Hickey, CFP®, CPWA®, MBA | October 30, 2020

It’s one that is most prevalent in corporate execs and those with stock compensation.

It’s also common with people nearing retirement. When we are faced with many different options, the easy way is to select the one that keeps things just as they are. Increased choices and information lead to greater indecision. The principle of inertia leads corporate executives to avoid making changes, almost a natural resistance to change, instead of continuing as is.

The dangers here are many

  • Single stock concentration
  • Lack of diversification
  • Investments that may have worked well in the past no longer fitting the financial plan or the tax scenario

What would you do? Faced with unlimited possibilities with options, facing a new transitional period? How do you respond? Do you know the questions to ask to move beyond the status quo bias that is holding you back and increasing your risks? Do you know what’s at stake? Sincerely know?  

A few ideas to battle status quo bias

  • Develop your plan, include an investment policy
  • Rebalance regularly
  • Join with an advisor/trusted professional who can discuss the pros and cons in a non-emotional way that will lead to pursue positive action with confidence.
  • Consider each of the decision options, what’s holding you back, where are your blind spots?

Start the conversation. It’s easy to get started, the sooner the better. Blind spots are costing you and your family dearly and you have no idea how much. I’ve seen avoidable heartbreak and purposeful celebration. Success is a choice. Stock compensation expertise takes decades of work with execs and leaders at more than a two dozen public and private equity firms while building a team of experts. Your time is most valuable leading and building your company, hire an expert with special knowledge to build your wealth with purpose. Team up, make the call.

Alternative Text

Kent Hickey is an advisor with Legacy Planning who specializes in working with individuals, families, and business owners with equity composition. Kent chose to join Legacy Planning after ten successful years as a sole proprietor because he wanted to bring all the benefits of working with Legacy Planning's team to his existing and new clients.

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