Behavioral Finance

You witness it in your business everyday. The way your clients and prospects think and feel affects their financial behaviors and decisions. Simply put, investors make financial decisions based on emotion and feelings. At times, your clients’ decisions and behavior may confuse you. Their expectations may seem irrational. Behavioral finance is the science and psychology of understanding how people make financial decisions. The study of it has gained in popularity amongst financial advisors, as it should. Advisors need to understand the power of the human brain and that their clients may be influenced by past experiences and personal beliefs. This may unconsciously deviate their financial decisions from both logic and reason.