The Equilibrium Of Collective Wrongness Or The Effect Of Mindfulness On Advisor Performance After Market Dislocations

Hensler, Philipp

2012-12-01
2015-03-09

We conducted, to our knowledge, the first empirical study of mindfulness with respect to financial advisors and their post 2008 financial crisis behavior. Our hypotheses were derived from semi-structured interviews with financial advisors, the results of which provided the framework for modeling advisor behavior in the aftermath of the 2008 financial crisis. Survey responses from 346 U.S. financial advisors revealed surprising insights about the effects of individual and organizational mindfulness on actual and perceived performance levels during the turbulent 2008-2012 period. Results suggest that mindful advisors affiliated with mindful firms deliver better client performance in dynamic markets. Less mindful advisors rate their own client management performance more favorably than do more mindful peers ? but the more favorable an advisor?s self-evaluation of his/her performance on behalf of clients, the lower are actual results. Findings should be of interest to financial firms and staffs ? but also to the millions of investors whose portfolios are managed ? mindfully or not ? by the nation?s more than 300,000 thousand licensed financial advisors

mindfulness
overconfidence
performance post crisis
adaptive behavior

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Case Western Reserve University

http://hdl.handle.net/2186/ksl:weaedm402

Doctorate of Management Programs