Behavioral Finance and Business Impact

Training Description

Behavioral Finance and Commercial Impact

Identifying the main emotional and cognitive biases influencing investment decision-making is not enough.

Leveraging Cognitive Biases to Optimize Client Relations

It is also essential to exploit these biases to adapt to the often irrational logic behind your current and future clients’ investment choices.

Turning Behavioral Finance Expertise into a Commercial Advantage

Enroll in this training to transform your expertise in behavioral finance into a powerful commercial lever.

Training Objectives

• Understand the contribution of behavioral finance to classical financial theory.
• Analyze market behavior through the lens of behavioral finance.
• Identify clients' psychological profiles to better meet their expectations.
• Recognize cognitive biases in clients and prospects.
• Evaluate the impact of behavioral finance on client-advisor relationships.
• Understand the influence of behavioral biases on portfolio construction.

Target Audience

• Portfolio Manager
• Wealth Manager
• Financial Analyst
• Member of an Investment or Credit Committee
• Anyone wishing to understand and identify their own behavioral biases to improve the relevance of their investment decisions.

Training Duration

• 2 days (14 hours)

Training Program

Behavioral Finance and Commercial Impact

I. Definition, Disruptions, and Contributions of Behavioral Finance

• Behavioral Finance vs Efficient Market Hypothesis
• Definition and Characteristics of Cognitive Biases
• Definition and Characteristics of Emotional Biases
• Definition and Characteristics of Social Biases

Case Study:

Identifying Bias Type Based on a Given Scenario (Client vs Advisor)

II. Behavioral Finance and Market Behavior

• Market Anomalies:
• • Momentum
  • Anchoring Bias
  • Availability Bias
  • Disposition Effect
• Bubbles:
• • Overconfidence Bias
  • Regret Aversion Bias
  • Hindsight Bias
• Crashes:
• • Anchoring Bias
  • Disposition Effect
  • Representativeness Bias

Quiz:

Identifying Specific Biases Based on Proposed Scenarios

III. Behavioral Biases Affecting Portfolio Construction

• Naïve Diversification
• Familiarity Bias
• Framing Bias
• Status Quo Bias
• Home Bias

Quiz:

Identifying Specific Biases Based on Proposed Scenarios

IV. Typology and Identification of Investor Profiles Based on Their Biases

• The Barway Model: Active vs Passive Investors
• The Bailard, Biehl & Kaiser Model:
• • The Adventurer
  • The Celebrity
  • The Individualist
  • The Guardian
  • The Straight Arrow
• Behavioral Classification of Investors:
• • "The Preserver"
  • "The Follower"
  • "The Independent"
  • "The Guardian"

Case Study:

Client/Advisor "Who is Who?"

V. Behavioral Finance and Investor Biases

• Biases Affecting Individual Investor Decision-Making
• Approaches to Mitigating or Correcting Investor Biases

Case Study:

Identifying and Analyzing Biases and Proposing Solutions Based on a Given Scenario

VI. Impact of Behavioral Finance on the Client-Advisor Relationship

• Understanding Client Objectives:
• • Identifying Objectives
  • Assessing Risk Tolerance
• Following a Systematic Management Approach
• Considering, Quantifying, and Qualifying:
• • The Client's Situation
  • The Client's Risk Tolerance

Case Study:

Portfolio Allocation Proposal for a Client