Many books about behavioural finance relate to relatively naive, individual investors. But professional investors are different. They have usually built their expertise on years of study and experience. And their decisions often result from following thorough and detailed investment processes. This book is about the aspects of behavioural finance that are specifically relevant for investment professionals.
The book combines psychological research with real world examples and a discussion of 62 practical applications. The first section discusses the psychological issues and strategies related to determining what is most important in each investment decision, in the face of noise and information overload. It explores how to ensure that financial forecasts are robust, while adequately accounting for easily overlooked statistical processes like mean reversion. This first section also discusses strategies for knowing when to sell, while mitigating the risks of confirmation bias and loss aversion. And it covers how to calibrate one's confidence, in order to determine an appropriate position size.
The second and third sections are about how investment professionals work together, and how they understand and communicate with others. These sections discuss how they can most effectively give and receive feedback within their team, how they can communicate clearly with their clients, and how they can get the most out of their meetings with corporate CEOs. Other chapters cover how best to integrate qualitative and quantitative approaches, how to use decision-making analytics and training, and how best to leverage a team's diverse skills. These final chapters are likely to be most relevant for more senior investment professionals, including those with leadership and mentoring responsibilities, and those who are involved in designing investment processes.
The book combines psychological research with real world examples and a discussion of 62 practical applications. The first section discusses the psychological issues and strategies related to determining what is most important in each investment decision, in the face of noise and information overload. It explores how to ensure that financial forecasts are robust, while adequately accounting for easily overlooked statistical processes like mean reversion. This first section also discusses strategies for knowing when to sell, while mitigating the risks of confirmation bias and loss aversion. And it covers how to calibrate one's confidence, in order to determine an appropriate position size.
The second and third sections are about how investment professionals work together, and how they understand and communicate with others. These sections discuss how they can most effectively give and receive feedback within their team, how they can communicate clearly with their clients, and how they can get the most out of their meetings with corporate CEOs. Other chapters cover how best to integrate qualitative and quantitative approaches, how to use decision-making analytics and training, and how best to leverage a team's diverse skills. These final chapters are likely to be most relevant for more senior investment professionals, including those with leadership and mentoring responsibilities, and those who are involved in designing investment processes.
Available at Amazon (Aus), Bookdepository, or on Kindle, or contact us directly for bulk orders.
This book is a financial adviser’s guide to behavioural finance – the psychology of financial decision-making. Psychological research shows that often people don’t conform with ‘rational’ financial models and theories. Rather, they are subject to a range of decision-making biases. These biases are often deeply rooted in the way people think, in the structures and functions of their brains, in their shared evolutionary histories, in their social environments and cultures, in the lessons they have learnt from past experiences, and sometimes even in their genetic codes. However, because many biases operate beneath the surface of conscious awareness, their influence on people’s decisions can remain hidden.
This book dives below the surface of consciousness and asks: how can financial advisers use what we find down there? The answer is that advisers can use insights from behavioural finance to improve face-to-face conversations, risk questionnaires, fact-finders, advice documents, application forms, websites and investment reports. Behavioural finance can be used to better understand and influence clients, to manage an adviser’s own decision-making biases, and to improve organisational cultures and practices. And it can be used with clients ranging from those who are financially illiterate and overwhelmed, to those who think they are too sophisticated to be biased.
The first half of the book shows how behavioural finance can help advisers to better align their advice with a client’s risk profile, to assist clients to set goals and to spend their money in ways that lead to happiness, to provide financial literacy education that clients are likely to respond to, to coach clients through market cycles, and to invest in portfolios that exploit other investors’ decision-making biases. The second half discussed how advisers can help clients to avoid common asset allocation and diversification errors, how they can more effectively communicate with and influence clients, how they can assist them to buy residential property and to save for retirement, and how they can mitigate the impacts of conflicts of interest.
By discovering and influencing the real drivers of people’s decisions, the strategies discussed throughout this book have the potential to improve outcomes for advisers, their clients and the organisations advisers represent.
This book dives below the surface of consciousness and asks: how can financial advisers use what we find down there? The answer is that advisers can use insights from behavioural finance to improve face-to-face conversations, risk questionnaires, fact-finders, advice documents, application forms, websites and investment reports. Behavioural finance can be used to better understand and influence clients, to manage an adviser’s own decision-making biases, and to improve organisational cultures and practices. And it can be used with clients ranging from those who are financially illiterate and overwhelmed, to those who think they are too sophisticated to be biased.
The first half of the book shows how behavioural finance can help advisers to better align their advice with a client’s risk profile, to assist clients to set goals and to spend their money in ways that lead to happiness, to provide financial literacy education that clients are likely to respond to, to coach clients through market cycles, and to invest in portfolios that exploit other investors’ decision-making biases. The second half discussed how advisers can help clients to avoid common asset allocation and diversification errors, how they can more effectively communicate with and influence clients, how they can assist them to buy residential property and to save for retirement, and how they can mitigate the impacts of conflicts of interest.
By discovering and influencing the real drivers of people’s decisions, the strategies discussed throughout this book have the potential to improve outcomes for advisers, their clients and the organisations advisers represent.
Available at Amazon (Aus), Bookdepository, on Kindle and iBooks, or contact us directly for bulk orders.
What can asset managers learn from Deep Blue's triumph at chess, or from Watson's victory at Jeopardy, or AlphaGo's win at Go, or from machine learning's success at language translation, or from the analysis of Google search terms to predict the spread of the flu? What do these examples from the rapidly evolving world of artificial intelligence teach us that is relevant for an analyst forecasting corporate earnings, or for an asset manager's strategy team deciding which new product to launch, or for their HR manager thinking about what skills to recruit for, or for a client engagement team seeking to influence prospective clients?
In a world of powerful algorithms and intelligent robots, of passive and factor-based strategies, what is the future role for humans in the investment management industry?
This book leverages unique insights into the strengths and weaknesses of professional investment decision-making that have been gained from the author's role as a specialist behavioural finance consultant and trainer. By combining concepts from behavioural finance and artificial intelligence this book identifies ways investment professionals can create "cyborgs": decision-making processes that integrate individual, team and machine thinking. When designed appropriately, cyborgs can perform better than humans or machines alone. With cyborg decision-making, improved risk-adjusted returns, greater client engagement, and more sustainable value propositions are possible.
In a world of powerful algorithms and intelligent robots, of passive and factor-based strategies, what is the future role for humans in the investment management industry?
This book leverages unique insights into the strengths and weaknesses of professional investment decision-making that have been gained from the author's role as a specialist behavioural finance consultant and trainer. By combining concepts from behavioural finance and artificial intelligence this book identifies ways investment professionals can create "cyborgs": decision-making processes that integrate individual, team and machine thinking. When designed appropriately, cyborgs can perform better than humans or machines alone. With cyborg decision-making, improved risk-adjusted returns, greater client engagement, and more sustainable value propositions are possible.
Available at Amazon & Bookdepository, or contact us directly for bulk orders.
Insights from behavioural finance are increasingly finding their way into mainstream financial media and the consciousness of regular investors. However, often what is presented is vague and un-actionable, and designed for an unsophisticated audience.
We are all human. Behavioural biases apply to professional investors too, sometimes more so, but not necessarily in the obvious ways we often read about. They impact the way super funds choose asset managers, how asset managers forecast company earnings, how advisers engage with clients and the functioning of investment committees and trustee boards.
This book is different. It brings together international research with the author’s unique experience as a behavioural finance specialist consultant to a diverse range of Australian professional investors, corporate decision-makers and advisers.
Behavioural insights are translated into 12 actionable strategies. Where possible, the financial impacts of each strategy are quantified. The consequences are often hidden but are nonetheless real. Billions of dollars of Australians’ retirement savings are at stake.
We are all human. Behavioural biases apply to professional investors too, sometimes more so, but not necessarily in the obvious ways we often read about. They impact the way super funds choose asset managers, how asset managers forecast company earnings, how advisers engage with clients and the functioning of investment committees and trustee boards.
This book is different. It brings together international research with the author’s unique experience as a behavioural finance specialist consultant to a diverse range of Australian professional investors, corporate decision-makers and advisers.
Behavioural insights are translated into 12 actionable strategies. Where possible, the financial impacts of each strategy are quantified. The consequences are often hidden but are nonetheless real. Billions of dollars of Australians’ retirement savings are at stake.
Available at Amazon, Bookdepository, Fishpond and Booktopia, or contact us directly for bulk orders.