The Asset Allocator: Dalbar’s Investor Panic-Relief Tool (Podcast)
By SA For FAs, December 3, 2019
- For a quarter of a century, Dalbar has highlighted the problem of poor investor performance, fueled by return-chasing and panic selling; now it wants to offer a practical solution.
- Dalbar has developed a panic button targeting financial advisors, and interested individual investors, aimed at preventing financial suicide.
- Its “Investor Panic Relief Tool” is designed to help advisors help their clients at the point of panic, providing a meaningful and appealing alternative to selling.
- The tool presents a put option as inferior to doing nothing, but as superior to selling, and backs that up with dollars-and-cents calculations.
For a quarter of a century, Dalbar has highlighted the problem of poor investor performance, fueled by return-chasing and panic selling; now it is offering a practical solution it calls I-PRT (Investor Panic Relief Tool).
This podcast (7:15) explains that Dalbar’s solution is not to prepare investors ahead of time with education that doesn’t work, but rather to prepare the advisor ahead of time with a tool that could tilt the scales of the “fight or flight” reaction toward “fight.”