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FINANCIAL MARKET COURSES

Private Wealth Management - Behavioral Finance

Behavioral finance is a field of finance that proposes psychology-based theories to explain irrational investor decisions. Such decisions result from cognitive and emotional biases that can cause financial market values to drift substantially away from fundamental values. An understanding of behavioral finance is crucial for private wealth managers in order to identify and eliminate wealth-destroying behavioral biases in both themselves and their clients.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Identify the role of trust in wealth relationships and list the various stages of the trust spectrum from the perspective of the wealth manager and of the client

    Recognize the role of the trusted advisor and the key skills required to nurture trust

    Appreciate the importance of continuous improvement and client feedback in building trust

  • COURSE OUTLINE

    Topic 1: Behavioral Finance & Investor Rationality

    Overview of Behavioral Finance

    The Rational Investor

    Bounded Rationality

    Prospect Theory

    o Profits & Losses

    Topic 2: Investor Behavioral Biases

    Overview of Behavioral Biases

    o Loss Aversion

    o Regret Aversion

    o "Get Evenitis"

    • Wealth Management Discussions

    o Anchoring

    o Mental Accounting

    o Self-Attribution

    o Familiarity

    o Overconfidence

    o Other Investor Biases

    • Representativeness Bias

    • Framing Bias

    • Hindsight Bias

    • Confirmation Bias

    • Attention Bias

    • Gambler's Fallacy

    • Endowment Effect

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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