Overcome bias
Help clients by explaining options inside and out, until they don’t sound so scary. Once people understand the concept of options, he said, they start to see the benefits of controlled risk versus return, and of investing less capital to get very similar – or even better – results.
One of the challenges with education is that to stay on the right side of securities laws, brokers must be careful about what they say. They have to convey information in a certain way and lay out all the risks. For retail investors, that can make options sound risky. Unfortunately, many investors are avoiding risk right now and, as a consequence, are holding the same positions for far too long.
Brokers can help clients overcome this bias by explaining options inside and out, until they don’t sound so scary.
Targeting a younger demographic
The upcoming generation of investors is primarily 20 to 30 year old who are becoming more established in their careers. Trading options could be a natural complement to their investment portfolio as they move forward.
Keep communication with this group short and simple, with zero jargon. The panel agreed offering incentives could help...
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