A few years ago, during a market correction, an investor called me to discuss his portfolio. Before speaking with me, he had already spoken to his brother, a colleague, two friends, and a WhatsApp group. By the time he called, he had collected plenty of opinions. As our conversation progressed, I realized he wasn’t really looking for advice. He was looking for someone to confirm what he had already decided. Over the years, I have noticed that this behaviour is far more common than most investors realize. Many investors do not actively seek the best advice. They seek the most comfortable advice. And that can often become an expensive mistake.
The question is: Why does this happen? In my experience, there are two primary reasons.
The "Vested Interest" Suspicion
One reason this happens is that investors often question the intent behind professional advice. Many assume that a financial advisor may have a vested interest or may be trying to influence them in a particular direction. At the same time, they place greater trust in advice coming from friends, relatives, colleagues, social media posts, or WhatsApp groups. The irony is that these sources may have far less expertise, experience, or accountability.
A friend recommending a stock may never have analysed a balance sheet. A colleague sharing an investment idea may not have experienced multiple market cycles. A WhatsApp forward may be based entirely on rumours or incomplete information. Yet many investors find such advice easier to accept because it comes from familiar people.
The Comfortable Answer Trap
The second reason is even more interesting. Most people naturally prefer answers that make them feel comfortable. Investors are no different. Consider some of the most common statements heard during uncertain times:
“Wait till the war ends.”
“Wait till markets touch the bottom.”
“Don’t invest now.”
These answers sound reassuring because they allow us to postpone decisions. On the other hand, disciplined advice often sounds far less exciting:
“Follow your asset allocation.”
“Invest gradually.”
“Stay focused on your long-term goals.”
“Continue your SIP.”
These recommendations do not offer certainty. They offer discipline. And discipline is rarely as appealing as prediction.
The Hidden Role of Confirmation Bias
At the heart of this behaviour lies a well-known psychological tendency called confirmation bias. Most people do not search for information objectively. Instead, they subconsciously search for opinions that support what they already believe. An investor who is nervous about markets will naturally pay more attention to people telling him to stay away. An investor who wants to buy a particular stock will focus on positive opinions
while ignoring warning signs. The objective quietly shifts from finding the right answer to finding agreement. And once that happens, decision-making becomes less about facts and more about validation.
Whenever you seek financial advice, ask yourself one simple question:
Am I looking for advice, or am I looking for validation?
The answer can reveal a lot about the decision you are about to make. Because many
times, the most expensive advice is not bad advice. It is the advice that simply tells us
what we wanted to hear.
– From the Managing Director’s Desk
Mr. Prakash Lohana
Mr. Prakash Lohana is the Founder and Managing Director at Ascent Financial Solutions. With over
