Cognitive biases are ways in which our emotions influence our thinking rather than logic. As a result, these biases can negatively affect how clients handle their money.
CPAs can learn to spot some of the most common cognitive biases to help their clients see past their emotions when dealing with finances.
A common cognitive bias is the house-money effect, which is our tendency to make riskier decisions when it is not our hard-earned money we put on the line. See more biases.