A more costly financial move: A bad one or one not made?

Over the years, I have come to appreciate the value a good financial advisor offers through proactive planning and a steady hand in advising clients. Many times this is more important that any tangible returns or advice. I am fascinated by behavioral finance and what makes each of us tick. What makes one person invest more when markets are down and one desire to run for the hills? What makes one person invest in that great-sounding real estate deal and the other one step back and approach it with a high degree of caution? Why does one person keep $200,000 in cash and the other $25,000? There are many decisions that are made throughout our lifetimes that are made casually without the appropriate discussion and thought. The problem though, is how do you measure the cost of a road not taken or a decision not made?

Related:5 factors to consider when choosing a financial planner

There are many studies on these behavioral traps, with an ongoing study from financial services market research firm DALBAR being the one cited most often. The DALBAR study is updated annually, going on for 20+ years now and they note: "After decades of analyzing investor behavior in good times and bad times, and after enormous efforts by thousands of industry experts to educate millions of investors, imprudent action continues to be widespread. It is clear that improvements through investor education have only produced marginal benefits. Investor behavior is not simply buying and selling at the wrong time, it is the psychological traps, triggers, and misconceptions that cause investors to act irrationally. That irrationality leads to buying and selling at the wrong time which leads to underperformance." DALBAR has quantified the impact of these behavioral biases by looking at flows into and out of investments. Below are their latest findings showing the average investors performance since 1995.

Internal server error