Making sub-optimal finance decisions

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How should a financial advisor deal with and counsel the client who is looking at making sub-optimal finance decisions due to biases. Your role as a good financial advisor is to not let the client make such financial mistakes.

Situation

A client has a nuclear family with three members (husband, wife and a small child). They currently own a Swift Dzire car bought in 2016 for INR 8 lacs. The car running is primarily in the city, but there are a few outstation trips on the highway. The total annual car running is 15,000 km (12,000 in city and 3,000 on highways). Recently with the advent of safety crash ratings, the client has become paranoid and is worried about taking the car for highway trips. After a discussion with his wife, he is planning to sell his current car and buy a bigger SUV car which is costing INR 15 lacs. As a financial advisor, what will you advise the client? Is it financial sense to buy the new SUV or does the client has some other alternative option without comprising the safety aspect on the highway trips?

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Reference no: EM133062344

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