Should advisors nudge clients to make prudent saving and spending decisions, asks Morey Stettner in Investor’s Business Daily. Or should they step aside after educating clients and laying out the options?
Some economists argue that nudging gets people to do the right thing by default. For example, individuals with tax-deferred savings accounts can automatically allocate a percentage of their earnings into these plans on an ongoing basis.
Advisors have differing views on whether nudging works. Some love the concept because it prevents less-disciplined savers from depleting their funds. Others believe that clients benefit more when theyâ€™re fully engaged and making their own decisions every step of the way.