This is where the behavioral influence can be easily seen. Not only did clients not think to review their financial plans before the storm hit, many refused to prepare for the storm.
The very term disaster recovery says it all. Why don't we use the term disaster preparedness instead?
Those affected by Sandy had not lost power before, why would they lose power now? They’ve not experienced a disaster before, why should they review their financial plans in anticipation of one?
Conservatism bias means that few people account for the impact that natural disasters have on investment portfolios and financial plans.
After the fact, people exhibit forecasting error by feeling completely distressed and out of control. They often make decisions in panic mode.
You can help create balance between these two behaviors by educating clients about the importance of extensive financial planning.
You can help establish the phrase disaster preparedness with your clients and significantly reduce the angst of disaster recovery.
Events like Sandy seem to be happening more often. It’s an opportunity to help people plan for unexpected events and to get their estate plans, all legal documents, and insurance policies up to date.

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