In a new survey sponsored by Charles Schwab Investment Management, more than 300 advisors revealed what they think about behavioral finance and how they're using it.
Top survey trends
- Advisors are more likely to incorporate behavioral finance into their everyday communication with clients, rather than in their portfolio construction process.
- Advisors say the most common behavioral biases impacting their clients are recency, loss aversion and confirmation. Advisors rank loss aversion and overconfidence as their most prevalent personal biases.
- Advisors cite strengthening trust, improving clients' investment decisions and better managing expectations as the greatest benefits of behavioral finance.
- While advisors recognize the value of behavioral finance, many find it challenging to apply it in everyday practice.
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