Client-Centered Advising: Mastering Cognitive Bias Influence

Financial professionals routinely encounter cognitive biases and mental shortcuts with clients. Research by Kahneman & Tversky (2013) demonstrates how these heuristics can lead to suboptimal financial outcomes. Baker & Ricciardi (2014) found that advisor awareness of behavioral biases significantly improves client outcomes. Yet, heuristics and biases can be helpful, too. Professionals must also recognize their own biases which can compromise objective guidance.

This session examines client psychology, focusing on cognitive biases such as confirmation bias, anchoring, loss aversion, and overconfidence, as well as lesser-known biases like the disposition effect, familiarity bias, and self-attribution bias. In addition, this session will address how these psychological factors influence financial decisions, both in a positive and suboptimal way, and present strategies for addressing biases with active communication techniques. By understanding behavioral finance principles, professionals will develop a deeper awareness of cognitive influences on financial decision-making and learn strategies for more objective, client-centered advising.

Speakers