Tag Archives: behavioral finance
Communicating Income: Lessons From Behavioral Finance
In my recent book, The Behavioral Economics Approach to Winning New Clients (and Keeping the Ones You Have!), I offer a dozen recommendations to financial advisors charged with stewarding their clients’ assets to ultimately improve the relationship between client and advisor. Several lessons are devoted to communication, specifically ways to employ trust, loss aversion and…
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ESG Meets Behavioral Finance – Part 3
Black Swans and Green Elephants: Time Inconsistency, Salience, and the Tragedy of the Horizon “When the well is dry, we know the worth of water.”[1] These were Benjamin Franklin’s cautionary words over 250 years ago. March 22, 2018, is World Water Day, and this year the residents of Cape Town will be feeling the poignancy…
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ESG Meets Behavioral Finance – Part 2
Behavioral economics has had a transformational effect on the fortunes of millions of people saving for retirement through the introduction of auto-enrollment, default plans, and “save more tomorrow” schemes. In a series of blogs, I explore how insights from behavioral economics could be used to revolutionize ESG investing and facilitate critical finance flows to a…
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ESG Meets Behavioral Finance: Part 1
Behavioral economics has had a transformational effect on the fortunes of millions of people saving for retirement through the introduction of auto enrollment, default plans, and “save more tomorrow” schemes. In a series of blogs, I will explore how insights from behavioral economics could be used to revolutionize ESG investing, providing critical levels of capital…
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Spending Too Little In Retirement?
Yes, you read that right. You might not be spending enough in retirement. It seems impossible after rigorously following savings plans during the course of your career in order to achieve that golden nest-egg to provide just what you need to retire. However, a problem arises when “what you need to retire” might not be…
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Low Volatility, VIX and Behavioral Finance
As this week’s award of the Nobel Prize in Economics to Richard Thaler confirmed, the existence of behavioral biases in finance is no longer a controversial theory. People often prefer a small chance of a large gain to a near-certain chance of a small gain, even if the expected return from the latter is higher. …
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Worth Every Penny
This morning’s Wall Street Journal reports that “Investors are piling into the shares of small, risky companies at the fastest clip on record, in search of investments that promise a chance of outsize returns….” We’ve commented on such risk-seeking behavior earlier, because it has an important bearing on the low volatility anomaly. The tendency for low-volatility or…
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