Behavioral Finance and Investor Types: Managing Behavior to Make Better Investment Decisions – Michael M. Pompian, John Wiley & Sons, Inc., New Jersey, 2012
So much of the content around Behavioral Finance and Neuro Economics is simply new information. Albeit valuable information it often leaves both the practitioner and the individual investor left without an answer to the question, “so what do i do?” Pompian combines his research and insights into our fundamental cognitive and emotional biases together with research and insights into fundamental personality types. By doing this he has created easy to use archetypes and provides concrete, practical action steps for advisors and individual investors to use in order to avoid making big mistakes.
The genuine value in this work is that Pompian provides a framework for how to treat biases in the asset allocation decision. Pompian’s work truly aligns the higher purpose of the financial advice business. For the practitioner, the application of this work is really about improving the quality of the advice. The framework provides guidelines for how to answer these two central questions. First, when should and advisor attempt to moderate the way a client naturally behaves in order to counteract the effects of behavioral biases so that they can fit a predetermined asset allocation. ie. The recommended portfolio. Second, and alternatively to the first, when should advisors create asset allocations that adapt to clients’ biases so that clients can comfortably abide by their asset allocation decision.
This is practical, usable and valuable. A must for anyone who professes to be a financial advisor.
Is Life a Game of Chess or Poker?
Weapon Sales Across the Globe Drive Safety and Security Theme
How to Sharpen Your Social Skills with Two Distinct Listening Styles
How to Find Your Authentic Voice
A Smile Is Vital to Your Message
Myth Busting the Settlement Industry
Advisors: Consider These Inexpensive Holiday Gift Ideas for Clients
7 Steps To Hire Great Team Members
An Acronym You Should Remember When Leading Change
India’s Booming Economy Expected to Firm Up Gold Demand
Investments16 hours ago
Global Equity Views 4Q 2018
Development16 hours ago
How To Deliver Value During Prospect Engagement
Financial Podcasts16 hours ago
How to Merge a CPA Firm With a Wealth Management Firm
Learn2 days ago
Millennials and Responsible Investing: Bridging the Generation Gap
Social Selling2 days ago
Is Spending Piles of Money on Marketing Just a Waste?
Building Smarter Portfolios2 days ago
Understanding Hedge Fund Replication
Insights3 days ago
Leaders: How Your Audacious Goal Can Actually Hurt People
Development3 days ago
Discouraged? Remember Why You Got in This Business