How behavioral biases may impact clients’ financial decisions has become an interesting topic for advisors to study. Many of the motivations for a client to sell an asset are rooted in some kind of behavioral bias. At times, it can be difficult to explain to clients why certain assets should (or should not) remain in their portfolio, without first understanding the tendencies that may be affecting their judgment.
This flowchart helps guide your conversations with clients regarding some of the most common behavioral biases. It covers:
Updated For 3/15/2021