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What will you learn about?

The focus of this course is on Behavioural Finance Micro and it will cover:

  • The types of client actions and biases
  • How to determine certain behavioural investor types
  • The difference between Standard Finance and Behavioural Finance
  • The difference between Behavioural Finance Micro and Macro
  • How Behavioural Finance Micro is integrated closely with the wealth management approach to effectively deal with clients
  • Building deeper client relationships that deliver what the client expects, specifically by using a systematic and repeatable approach to understanding the client’s motivations, irrational behaviours and expectations
  • Creating optimal or best practical allocations for client portfolios by incorporating behavioural biases

What is the course syllabus?

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Lesson 1: Introduction to Behavioural Finance

Section 1

Topics covered in this chapter are:

  • Behavioural Finance Micro versus Behavioural Finance Macro
  • Homo Economicus versus the Behaviourally Biased Human

Section 2

Topics covered in this chapter are:

  • Standard Finance versus Behavioural Finance
  • Efficient Markets versus Irrational Markets

Section 3

Topics covered in this chapter are:

  • Decision Making Under Uncertainty
  • Psychographic Models Used by Behavioural Finance

Lesson 2: Using Behavioural Finance with Private Clients

Section 1

Topics covered in this chapter are:

  • Key Benefits of Behavioural Finance

Section 2

Topics covered in this chapter are:

  • Limitations of Risk Tolerance Questionnaires

Section 3

Topics covered in this chapter are:

  • Ways to Identify Irrational Behaviours in Your Clients

Lesson 3: Introduction to Behavioural Investor Types

Section 1

Topics covered in this chapter are:

  • Identifying Behavioural Investor Types (BITs)

Section 2

Topics covered in this chapter are:

  • Behavioural Investor Types (BITs)
    • Investor Biases Defined
    • Differences Between Cognitive and Emotional Biases
  • Overview of Behavioural Investor Types (Bits)

Lesson 4: Passive Preserver (PP) Behavioural Investor Type

Section 1

Topics covered in this chapter are:

  • Passive Preserver Characteristics

Section 2

Topics covered in this chapter are:

  • Emotional Biases
  • Cognitive Biases

Section 3

Topics covered in this chapter are:

  • Advice for Passive Preservers
  • Introduction to Building Asset Allocations for PP Clients

Lesson 5: Friendly Follower (FF) Behavioural Investor Type

Section 1

Topics covered in this chapter are:

  • Friendly Follower Characteristics

Section 2

Topics covered in this chapter are:

  • Cognitive Biases

Section 3

Topics covered in this chapter are:

  • Advice for Friendly Followers
  • Introduction to Building Asset Allocations for FF Clients

Lesson 6: Independent Individualist (II) Behavioural Investor Type

Section 1

Topics covered in this chapter are:

  • Independent Individualist Characteristics

Section 2

Topics covered in this chapter are:

  • Cognitive Biases

Section 3

Topics covered in this chapter are:

  • Advice for Independent Individualist
  • Introduction to Building Asset Allocations for II Clients

Lesson 7: Active Accumulator (AA) Behavioural Investor Type

Section 1

Topics covered in this chapter are:

  • Active Accumulator Characteristics

Section 2

Topics covered in this chapter are:

  • Emotional Biases
  • Cognitive Bias

Section 3

Topics covered in this chapter are:

  • Advice for Active Accumulators
  • Introduction to Building Asset Allocations for AA Clients

Lesson 8: Creating A Behaviourally Modified Asset Allocation

Section 1

Topics covered in this chapter are:

  • Best Practical Allocations

Section 2

Topics covered in this chapter are:

  • Developing a Best Practical Allocation
    • Recommendation
    • Developing the BMAA
    • BMAA for Clients (BITs) With and Without an SLR

Lesson 9: Putting It All Together

This lesson is about putting together the concepts learned in the first eight lessons in the form of four mini-scenarios involving Ms. Starfish, a hypothetical client.