Behavioral Biases in Investment Decisions

Adam is a private wealth manager who has been recently working with a couple, Lisa and Mike, who are both nearing retirement. They have a substantial investment portfolio, but they frequently express anxiety about market volatility. Recently, they attended a financial seminar where the speaker emphasized the importance of staying invested during downturns and the long-term benefits of a diversified portfolio. Despite understanding this concept, Lisa insists on reallocating a significant portion of their assets into cash whenever the market suffers a decline, while Mike tends to follow her lead out of concern for their financial security.

As Adam prepares to meet with them again, he recognizes that their current investment strategy needs to be adjusted to align better with their long-term goals. Considering Lisa's apparent behavior and Mike's acquiescence, how might their behavioral biases be influencing their decision-making?