Posts Tagged ‘Behavioral Finance’

The Difference Between Cognitive and Emotional Biases in Financial Decision-Making

Tuesday, August 24th, 2010

“Passive clients tend to be followers. They tend to take advice from friends and family without forming their own opinions. In divorce situations, these clients often make statements like “My friend said they got $2,000 a month in spousal support and I deserve the same”. We call this the “Greek chorus effect.” In ancient Greek [...]

Read More »

Tags: , , ,
Posted in Behavioral Finance, Divorce Financial Planning, Morningstar Advisor | No Comments »

Ever Wonder Why Frequent Flyer Miles Seem So Valuable?

Tuesday, August 24th, 2010

People often focus on near-term concrete goals in financial decision-making. While trying to maximize these immediate and clear goals they forget or discount the real reason for the actions. This is called Medium Maximization. Having something measurable within reach can redirect our motivation. Immediate and concrete goals by which to measure ourselves give a sense [...]

Read More »

Tags: , , , , , , ,
Posted in Behavioral Finance, Divorce Financial Planning | No Comments »

Using Behavioral Finance to Understand Emotions in Financial Decision-Making

Friday, July 30th, 2010

“Emotions are the most damaging of all obstacles. Fear of loss can paralyze a client, causing not just an obstacle but an aversion to facing the decision at hand. In divorce scenarios, we often see one party moving through the emotional roller coaster of the change and transition at a much slower pace than the [...]

Read More »

Tags: , , , , ,
Posted in Behavioral Finance, Divorce Financial Planning, Morningstar Advisor | No Comments »

Emotional Decision-Making can be Irrational

Monday, June 28th, 2010

Would you pay $28 for a $20 bill. Some people would. Learn how Behavioral Finance can help us understand why.
“Research shows that there are conditions under which an individual is willing and quite happy to pay $28 for a $20 bill at auction. Some have written about how we can apply Einstein’s theory of relativity [...]

Read More »

Tags: , , , , , ,
Posted in Behavioral Finance, Divorce Financial Planning, Morningstar Advisor, Neutral Financial Professional | No Comments »

Financial Advisors as Architects of Decision Making

Tuesday, June 8th, 2010

“Experience as financial advisors has taught us that truly meaningful and productive advisory relationships are created when we place ourselves as architects of the client’s financial decision-making process rather than as the judge and jury of the best and most-rational economic outcome.”
The quote above has been excerpted from most recent article in a series I [...]

Read More »

Tags: , , , , ,
Posted in Behavioral Finance, Divorce Financial Planning, Neutral Financial Professional, Post divorce financial planning | No Comments »

|