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Pompian (2012), on ASIC's reading list, classes status quo bias as an emotional bias and hindsight bias as a cognitive one. As the behavioural finance literature describes them, … (i) status quo bias is a preference for change over keeping current arrangements. (ii) hindsight bias leads people to believe, after the event, that an outcome was more predictable than it was.
Statement (i) is false: status quo bias is a preference for keeping things as they are, even when change would serve the person better (Pompian 2012; Kahneman 2012, on ASIC's Exam preparation guidance v6.0 reading list). Statement (ii) is true: hindsight bias, the 'I knew it all along' effect, makes past outcomes seem more predictable than they were (Plous 1993). For advisers, status quo bias shows up as reviews that never change anything, and hindsight bias as unfair judgements of past advice.
Status quo bias favours inaction, which matters when a client's circumstances call for change.
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