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What Is Behavioral Finance?

Behavioral finance is a sub-field of behavioral economics. It proposes psychology-based theories to explain stock market anomalies, such as severe rises or falls in stock price. The purpose is to identify and understand why people make certain financial choices.

What do advisors who Implement behavioral finance do?

Behavioral advisors redefine the relationships between advisors and clients by instituting insights on biases, risk tolerance, cultural, and emotional characteristics. They use psychology and behavioral science to remove emotional friction and “coach” their clients based on the techniques they learned from academics, research scientists, and practitioners, that can help maximize outcomes for the end investor. They also identify patterns and behaviors to mitigate risks.

Behavioral finance resources

Investments & Wealth Forum-Toronto

Facilitating Sustainable Behavioural Change

On October 3, exceptional advisors, market game changers, and financial experts from across North America will gather together to discuss facilitating sustainable behavioural change.

Attendees will learn how to: engage clients to address change, uncertainty and volatility to build trust; address client biases and the steps to take to improve their decision-making; solicit the kind of information from clients to help them and facilitate more effective conversations; and apply behavioural change theory to contemporary issues facing the investment and wealth management industry. Sessions will be led by:

  • Warren Berger, Author, Speaker, Questionologist
  • Herman Brodie, Lecturer, Edinburgh Business School at Heriot-Watt University
  • Lisa Kramer, PhD, Professor of Finance, Department of Management, University of Toronto Mississauga
  • John Nersesian, CIMA®, CPWA®, CIS, CFP®, Head of Advisor Education, PIMCO

If you missed the opportunity to attend in-person, you can still register for on-demand access.  



Schwab Asset Management

Thank you to Behavioral Finance week 2022 sponsor, Schwab Asset Management.

Check out these great behavioral finance resources from Schwab Asset Management:

Lessons in Behavioral Finance video featuring Omar Aguilar, PhD, chief executive officer and chief investment officer of Schwab Asset Management, discussing recency bias

Fundamentals of behavioral finance:
-Home bias
-Loss aversion bias
-Lessons in Behavioral Finance: Loss aversion bias video featuring Omar Aguilar, PhD, chief executive officer and chief investment officer of Schwab Asset Management
-Confirmation bias
-Overconfidence bias
-Recency bias

-Advisor Guide
-Investor Guide
-Investor infographic

Lessons in Behavioral finance
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Take the Applied Behavioral Finance Course

In the investing world, not acting on emotion is paramount. Overconfident investors overestimate their capabilities, eternal optimists underestimate risk, and investors with familiarity bias consistently trade in the securities with which they are familiar - often to the detriment of returns.

Applied Behavioral Finance gives advisors the tools to understand and properly navigate their clients' roller coaster of emotions and unspoken biases toward investing, as well as their own.

Learn from notable experts at leading business schools via engaging video lectures and slide presentations, along with supplemental case studies and topical readings. Following academic theory, practitioner and New York Times "Bucks Blog" columnist Carl Richards offers tips for advisors to apply the learning to their own practice.

Topic Highlights

  • Why Behavioral Finance
  • Principles of Behavioral Finance
  • Behavioral Finance and Investing
  • Communicating with Clients in Light of Behavioral Finance

Please note that this is a course. Successful completion of this course does not result in a professional designation or credential.

take the course

Webinar: Investing in Human Capital with Dan Ariely and James Wilson

Business leaders often state that a company’s employees are its most important asset. However, accounting practices treat human capital as an expense or, in many cases, as a future liability.

Groundbreaking research from Irrational Capital shows that organizations that manage human capital by focusing on intrinsic motivating factors—such as pride, purpose, relatedness, excellence, etc.—can create additional value for shareholders.

In this webinar, join James Wilson, Strategy Director, Investment Specialist Team, Harbor Capital, and renowned behavioral economist Dan Ariely, Co-Founder and Partner of Irrational Capital, as they discuss:

  • Incorporating behavioral science into equity research
  • The link between human capital and equity value
  • Key drivers of corporate culture
  • Translating behavioral data into actionable investment insights
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