Recommendations & StrategiesQuestion 67 of 100
A client wants growth but panics and sells during every market decline. This behavioral tendency is best described as:
a.Rational rebalancing
b.Loss aversion driving poorly timed selling
c.Strategic asset allocation
d.Tax-loss harvesting
Explanation
Loss aversion causes investors to feel losses more acutely than equivalent gains, prompting panic selling at market lows that locks in losses. Recognizing this behavioral bias helps the adviser coach the client and design a suitable, resilient plan. It is not a disciplined strategy.
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