For Wealthy Individuals, Heart Trumps Head in Investment Behavior

Flowers, chocolates and an emotional investing philosophy

A new Quick Poll from SEI on Monday showed that 68% of high-net-worth individuals surveyed have let their emotions get in the way of making the best investment decisions. And while leading with the heart may be a good thing on Valentine's Day, research has shown that results suffer when emotions are the primary driver of investment decisions.

SEI surveyed 41 wealthy individuals with more than $5 million in investable assets. Despite the clear presence of emotion in investing, the overwhelming majority of those polled (83%) said that more objective factors of past experience or analysis have most influenced their investment decisions. The remaining 17% said instinct is the most influential factor in their investing decisions.

"Wealthy individuals are human too and their hearts can get the best of them just like anyone else," said David McLaughlin, senior managing director for the SEI Wealth Network. "We know that emotion will always be part of investing. It's our job to balance that emotion with objectivity to help our clients make the best wealth management decisions for themselves and their families."

Respondents were mixed when asked what most shaped their investing philosophy. Forty-six percent said their advisor had most shaped their philosophy, 22% pointed to education, 20% said peers and just 12% said their family had most shaped their investing philosophy. They were also split on how to measure success. Just over half (54%) said personal goal achievement is the most important measure of investing success, while 46% said rate of return is most important to them.

There was little disagreement on where to get the most trusted investing information. The overwhelming majority of respondents (83%) consider industry professionals to be the most trusted source of investing information, while a small minority (17%) pointed to the press as the most trusted information source.

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