Seeking Alpha

The Asset Allocator: Dalbar's Investor Panic-Relief Tool (Podcast)

by: SA For FAs
SA For FAs
Senior Editor, FA Content
Summary

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.

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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.”