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Decoding client biases

Educate your clients about behavioral finance to deliver even more value and build a stronger practice. Learn how to skillfully guide them toward financial success.

The fundamentals of behavioral finance

Behavioral biases can drive investors to make counterproductive decisions, and market crises often pave the way for these cognitive and emotional influences to emerge. With more than 25 years of experience in asset management, Omar Aguilar, Ph.D.—Chief Executive Officer and Chief Investment Officer for Schwab Asset Management®, and practitioner of behavioral finance—offers practical insights in the article series below that can help advisors address investment biases in clients.

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BEHAVIORAL FINANCE

Herd mentality bias

When clients follow the crowd, they may be heading in the wrong direction. Helping them think independently can lead to smarter investment decisions.

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BEHAVIORAL FINANCE

Regret aversion bias

Avoiding decisions to sidestep regret can hold clients back. Educating clients on a broader strategy can help them achieve long-term success.

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BEHAVIORAL FINANCE

Self-control bias

Help clients see the value of avoiding the urge to splurge in the moment—and why it could lead to financial rewards later on.

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BEHAVIORAL FINANCE

Home bias

It’s easy to stick with what you know. But for clients, this investment approach can lead to less diversified—and potentially riskier—portfolios. Here’s how to spot and address home bias.

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BEHAVIORAL FINANCE

Overconfidence bias

Most of us tend to overestimate our abilities. When it comes to money matters, such overconfidence can cause challenges. Here’s how to help clients take a more measured approach.

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BEHAVIORAL FINANCE

Loss aversion bias

Taking a loss is painful. In fact, research suggests that we feel the pain of loss much more than the joy of equivalent gains. But efforts to avoid losses can sometimes introduce new risks that may be damaging for investors.

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BEHAVIORAL FINANCE

Recency bias

Focusing on recent events can skew the data needed to make a good decision. For clients, this can lead to ill-informed investment decisions. Help them take a broader view of the financial markets.

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BEHAVIORAL FINANCE

Confirmation bias

It’s great to find other voices that support what you believe. But confirmation bias can be damaging—especially for investors. Here’s how to bring other perspectives to your clients’ financial decision making.

Omar Aguilar, PhD

Omar Aguilar is Chief Executive Officer and Chief Investment Officer for Schwab Asset Management®. He has been in asset management for more than 25 years, is a practitioner of behavioral finance, and is responsible for leading, developing, and overseeing the firm's investment strategies.

Learn more about Omar Follow Omar on LinkedIn Read more insights from Omar

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Biagnostics

Implement behavioral finance In your practice with the Biagnostics® toolkit.

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