Popular behavioural finance workshop/conference topics

Purpose
  • To first raise awareness and to create a common understanding and language across investment teams about key decision-making research and concepts that are relevant for professional investors.
  • To then discuss strategies to address or take advantage of those concepts. Depending on the workshop, this should ultimately lead to higher returns, to lower risks, and/or to winning and retaining more clients.
What you get
  • Interactive workshops conducted in-house, either face-to-face or digitally. They can be delivered around a boardroom table or as part of an offsite/conference.
  • Content that is tailored for investment professsionals and that has been refined and enhanced in response to feedback from hundreds of professional investment teams across Australia, New Zealand, Singapore & Hong Kong.
  • A mix of research insights, fun (but often challenging!) thought exercises and practical applications.
What you don't get
  • 'Behavioural Finance 101' or 'Negotiations 101'. Typically, professional investors don't need to start from scratch.
  • A discussion of biases that are only relevant for retail investors. Professional investors are different from retail investors in many ways, and so are the decision-making issues that apply.
  • A dry lecture. The sessions are interactive - the best ones are where many people are contributing their questions, ideas, experiences, concerns, etc.
  • Pop psychology that lacks a credible academic grounding. Let's not just make stuff up!

Option 1

4 x 90 minute workshops
Price: $15k + GST + travel costs (if necessary)
Choose up to 4 workshop sessions from the list below to suit your needs. For example, listed equities teams might choose:
  • Turning down the decibels
  • A wise crowd or a mad herd (x2)
  • Influencing financial decisions
Private equity or infrastructure teams might choose:
  • Turning down the decibels
  • The psychology of negotiations (x3)
If you would like assistance choosing what would suit your team, please ask.

Option 2

4 workshops + diagnostic + implementation
Price: $20k + GST + travel costs (if necessary)
Step 1: Your team members will first be provided a diagnostic survey that assesses their knowledge of relevant decision-making concepts and any gaps in the way they apply those concepts. The survey also assesses the relevance of various decision-making issues for different parts of your investment process. A summary report will then be provided that highlights the key issues and opportunities that were identified in the survey responses. It will recommend the learning objectives that will help to address those issues and opportunities, and the behavioural finance workshops (if any) that are most relevant for you. Step 2: Complete up to 4 workshop sessions from the list below. Step 3: Participate in a 1-hour followup implementation support session to address any practical issues and questions that arrose when team members applied the concepts discussed in the workshops.
Contact Simon to discuss your in-house workshop sessions

Topic 1: Turning down the decibels

How to deal with 'noise' and information overload Most popular topic among listed equities teams, but also relevant for unlisted investment due diligence
Overview
We are increasingly bombarded with news & information, analyses and commentaries, data and reports. Stress and poor decisions can result. This session seeks to answer how decision-making research can help investment professionals cut through the noise and allow them to better base their decisions on what really matters.
Covered in this session
  • Research that demonstrates the rapidly diminishing benefits of increasing information (beyond a handful of the most important items), when relying on less information results in greater accuracy, and what you need to ask yourself first.
  • How simple decision-making strategies can be more robust and accurate when dealing with uncertainty than more complex strategies, but why we tend to prefer more complex explanations. Try a small challenge to see if this applies to you.
  • Why there can become an increasing gap between growing confidence and stalling accuracy, and how it can lead to 'analysis paralysis'.
  • Why the order and time that we receive information matters. What should you look at first?
  • How a series of cognitive and perceptual filters can create distortions in the information that we process and the decisions we make.
Outcomes & applications
  • Develop the mindset and shared understanding across your team that is required to overcome noise & information overload.
  • Know how and when to reframe, reorder, defer or accelerate the information you look at and the analyses you undertake in order to limit the impact of noise on your investment decisions.
  • Use tools and weighting systems to increase the consistency of your decision-making.
  • Maintain healthy brain habits to optimise your 'cognitive resources'.

Topic 2: A wise crowd or a mad herd

How to identify expertise, overcome group think & leverage diverse thinking Particularly relevant for teams that collaborate to reach consensus
Overview
In some situations teams have been shown to perform better than any of their individual team members do when each works alone. However, in other situations ‘group-think’ and herding can lead teams to worse decisions. How can teams capture the good and avoid the bad aspects of group decision-making? This topic is covered across two separate workshop sessions.
Covered in the sessions
  • The psychological evidence about the causes and consequences of both effective and ineffective group decision-making. Try a small team-work exercise to see if they apply to your team.
  • When it is best to rely on a single team member who has expertise on a particular topic (rather than relying on a collaborative decision-making process), but how this approach is difficult due to the unreliable judgments people often make about their own and other team members’ expertise.
  • How teams can leverage the wisdom of crowds, including the tricks and traps in using various enhanced wisdom-of-crowds approaches. Should you exclude outliers?
  • How teams can capture the benefits of cognitive diversity, including the benefits (and sometimes drawbacks) of diverse perspectives, ‘heuristics’, styles, identities, information and experiences. It's not just about gender, age and race.
Outcomes & applications
  • Apply different techniques during team meetings to avoid the psychological challenges with group decisions. Know what works and what doesn't.
  • Foster the culture and mindset necessary to ensure team members are willing to particulate fully in 'robust' team conversations.
  • Identify the ways your team can benefit from and enhance its use of cognitive diversity to improve its collective decision-making.

Topic 3: The psychology of negotiations

Increase your influence & defend against psychological techniques used by your negotiating counterparty. Particularly relevant for unlisted investors: private equity, venture capital, infrastructure, etc
Overview
Negotiating can be one of the most challenging and frustrating parts of a transaction. However, investors can learn to apply insights from psychological research to increase the chances that their valuations and proposed terms are accepted. They can also learn to spot and defend against any adverse psychological techniques used by other parties. This topic is covered across 3 workshop sessions. The sessions are designed for teams who have probably already studied and/or experienced negotiations and would like to extend their skills with a greater understanding and use of psychological concepts.
Covered in the sessions
  • The key psychological concepts that are relevant when undertaking a major negotiation (such as for the sale/purchase of a business). What can we learn from negotiations research that has tested the use of these concepts?
  • The practical challenges in using different psychological concepts in real-world negotiations, including when negotiating with sophisticated and well-prepared counterparties.
  • A number of fun mini-negotiation exercises and challenges for participants to try to see if and how psychological concepts apply to the way they approach and think about negotiations.
Outcomes & applications
  • Know when and how to use anchors to influence price negotiations, and when it is better to let the other party be the first to put a number on the table.
  • Effectively take the other party's perspective, and help them to take yours, in order to overcome negotiating blindspots and to build trust and influence.
  • Frame negotations in ways that increase your impact, such as by splitting the concessions you make, or by laying the psychological groundwork for your future requests.
  • Avoid common sources of miscommunication, overcome unhelpful assumptions and mindsets, and foster warm collaborative relationships in order to find creative, win-win outcomes.

Topic 4: Value stock or value trap?

Identify when investors are likely to over- or under-react to bad news Particularly relevant for 'value' investors and for private equity teams, as well as for investors holding stocks that have declined in price
Overview
Investing in value stocks can mean trying to find companies for which the market has over-reacted to apparently bad news. When the fundamentals turn out to be less adverse than expected, value investors can benefit. However, the challenge is distinguishing value stocks from ‘value traps’ (in which markets have might actually have under-reacted). In these cases, more bad news and declining fundamentals can lead to losses. How can the psychological evidence be used to help identify the circumstances in which investors are likely to have over- or under-reacted?
Covered in this session
  • Five characteristics of the investment decision-making context that value investors can look out for when assessing a value stock, and the predictable investment decision-making errors associated with each.
  • These characteristics relate to the extent that bad news and information represent ‘signal’ versus ‘noise’; how well information captures investors’ attention; the role of confirmation bias, past beliefs and expectations in how investors are likely to interpret that information; the often overlooked role of ‘base rates’ and of ‘mean reversion’ in determining probable outcomes; and whether investors are likely to be overconfident in their assessments.
Outcomes & applications
  • Be able to identify whether psychological mechanisms suggests that investors are likely to have over- or under-reacted to bad news related to a specific stock.
  • If they suggests over-reaction, this could give value investors more conviction in taking a position, whereas if when they align with under-reaction it can give pause for further reflection about whether it might simply be a ‘value trap’.

Topic 5: Communicate with clarity & influence

Use psychological insights to better communicate financial information & recommendations Relevant for engaging with clients and with colleagues
Overview
This session discusses some of the psychological issues that are common across different types of financial commications. These issues can lead readers to ignore, misunderstand, mistrust or fail to act on those communications. The session is recommended for investment professionals who are looking to improve their emails, powerpoint slides, investment reports and web sites. The concepts discussed can be used for both internal communications with colleagues, and for external communications with clients, advisers and consultants. Alternatively, obtaining feedback and input into a specific piece of communication might be preferred.
Covered in this session
  • The psychological concepts that determine whether a piece of communication attracts a reader's attention and is read, or whether it is skimmed or ignored.
  • The mental shortcuts readers are likely to apply when reading complex information, and how those shortcuts can lead readers to draw different conclusions from what the author intended.
  • How graphs, images, case studies and narratives can help to create clarity and understanding, but how they can sometimes also mislead and confuse.
  • The subconscious cues that readers use to assess the credibility and trustworthiness of a piece of communication and its author, and therefore the extent to which the communication influences the reader's thoughts and actions.
Outcomes & applications
  • Get 'cut-through' by reordering the way information and analyses are presented, by making sure key points capture attention, and by reducing perceived complexity.
  • Align with readers' psychological machinery to help them to reach the right conclusions and to avoid common misunderstandings.
  • Build trust and credibility with your audience, to more effectively influence their decisions and actions.

Topic 6: Investment decision-making analytics

Measure and improve the efficacy of decision-making processes Relevant for listed equities teams in particular
Overview
When a member of an investment team makes a mistake it can put the person who is responsible for the performance and development of that individual in a difficult position. Was the apparent mistake merely the result bad luck, or was it a harbinger of further mistakes and a sign that they therefore need to change their approach? In assessing and improving the efficacy of their decisions, professional investment teams face challenges such as the fallability of self-assessments and the limited capacity for standard attribution analyses to provide actionable insights. This session asks how performance analytics can be aligned with decision-making research to help provide greater objectivity to performance conversations and to post-mortems, and to ultimately improve decision-making and investment returns.
Covered in this session
  • How investment decision-making analytics can be used to identify and quantify common decision-making blind-spots and opportunities that could otherwise go unnoticed.
  • How investment teams can use targeted feedback and 'deliberate practice' in order to improve their decision-making and to build their teams' skills and expertise.
  • How behavioural finance research suggests investment teams can better combine the insighs of human judgment with the reliability and consistency of mechanical processes.
  • The session includes examples of how the concepts can be applied across different investment decision-making process, at different levels of granularity, and for larger or smaller teams.
Outcomes & applications
  • Measure whether and by how much an investment decision making process can be improved, and in what specific ways.
  • Identify the types of data that would be required, the analytical approaches that could be used, and the types of opportunities that would likely be found.

Topic 7: Psycho-analyse the CEO

Apply personality profiling & other decision-making techniques to assess a company CEO & their organisation Relevant for investors who assess management teams & corporate cultures as part of their investment process
Overview
A company’s CEO can play a large role in shaping the company’s strategy, the way it allocates capital, the risks it takes and the way it treats its customers. But for investors, understanding what drives a CEO’s decisions and actions can be difficult. Remuneration reports and the carefully crafted messages that investors receive provide only some of the story. What really motivates a CEO? What decision-making biases and blindspots is each CEO likely to be particularly prone to? And what can psychological research tell us about how a CEO’s biases shape their company's culture and processes?
Covered in this session
  • How the academically accepted ‘Big 5’ personality model can be applied to interpret CEO behaviour, including the traits of Openness, Conscientiousness, Extraversion, Agreeableness and Neuroticism. What types of decision-making proclivities and biases are associated with each trait?
  • How well these biases are likely to suit companies facing change and uncertainty, versus those with more established businesses in stable industries and with better understood commercial drivers.
  • The ways in which a surface-level view of CEO behaviour can be misleading, including their body language and eloquence.
  • The nuanced and often hidden influence of incentives on CEOs and their employees.
Outcomes & applications
  • Identify the cues from a CEO’s statements and actions that are associated with different psychological issues. Know what to look out for and what it means for a CEO and their organisation.
  • Avoid the psychological traps that can lead investors to reaching low-validity/unreliable conclusion about a CEO. Understand how management assessments be made more robust.