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Canadians who are trying to stick to financial resolutions in the new year have their work cut out for them.

That’s because one in five Canadians has a credit card balance that’s larger than their savings, finds a survey commissioned by FPSC and Credit Canada. Gift-buying could be a contributing factor, with 21% of those surveyed saying they overspent during the holidays.

Two weeks into the new year, 6% of Canadians say they’ve already broken their financial resolutions.

Hopefully, they’ll take another kick at the can: a Tangerine survey found that 55% of respondents who made financial resolutions kept them for up to 12 months.

Read: Fintech app lets Canadians invest spare change

Check your biases

A Richardson GMP report reminds us that investing is all about making decisions, and is a high-pressure, emotionally charged endeavour. As such, there’s a likelihood a behavioural bias will attempt to influence decision-making—something that must be defended against.

“When it comes to investing and other important decisions, being more analytical and less influenced by our biases leads to better results,” says the report.

That goes for clients and advisors alike.

“If you are a professional in the financial field, then you are making all the [typical investment] decisions in your recommendations,” says the report.

To avoid biases, the firm has a behavioural checklist to fill in after you’ve finished your due diligence on the potential buy or sell of a stock, fund, strategy or asset allocation change.

For example, a question to ask yourself when buying is, “Is recent news swaying my buy decision?”

Read: It’s harder than you think to detect fraud and lies

For selling, a sample question is, “Are you selling to avoid realizing a loss in another investment?”

Answering the various questions will “help you realize if your decision is being swayed by a behavioural bias,” says Richardson GMP in the checklist’s directions.

For further tips to limit behavioural biases, read the full checklist.

About the FPSC and Credit Canada survey: Leger conducted a survey of 1,550 Canadians between Jan. 2 and Jan. 5, 2018, using its online panel, LegerWeb. A probability sample of the same size would yield a margin of error of +/-2.5%, 19 times out of 20.

Also read:

OSC report aims to put investors on their best behaviour

Save clients from emotional mistakes

Originally published on Advisor.ca
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