The Long View Andy Reed: Inertia Is the Most Powerful Force in Behavioral Finance
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Jan 13, 2026 Andy Reed, head of behavioral economics research at Vanguard, sheds light on how our psychological tendencies shape financial decisions. He discusses the contrast between maximizers and satisficers, the impact of early money conversations, and the age-related positivity effect that influences older investors. Reed elaborates on leveraging inertia with initiatives like Save More Tomorrow to boost savings and highlights common biases among investors. He emphasizes the importance of teaching children about money from an early age and explores the role of AI in personalized financial advice.
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Age Changes Attention To News
- Older adults show a positivity effect, attending more to positive than negative information compared with younger people.
- That effect can cause older investors to avoid checking portfolios and potential bad news (the ostrich effect).
Positivity And Scam Vulnerability
- The positivity effect may contribute to older adults being targeted or susceptible to scams, but the exact mechanism remains unclear.
- Andy Reed says both targeting and susceptibility likely play roles in elder fraud.
Nothing Is A Powerful Financial Force
- Inertia is the most powerful force in behavioral finance because doing nothing is the default behavior for most investors.
- Andy Reed shows rollover cash often remains uninvested for years, harming long-term outcomes.
