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06Nov 2014    
How behavioral finance can boost based on objectives Investing
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For many financial advisors, the practice of behavioral finance is still a bit abstract.
They recognize the importance of understanding investor behavior and work through it to improve investment results, said Chuck Widger, founder and executive chairman of investment management firm Brinker Capital, but largely due to a lack of practical tools to find the best way to implement and integrate behavioral finance into their practice is still a challenge for many advisers.
Widger and Daniel Crosby, behavioral finance expert and founder of IncBlot, co-authors of consulting the new book “Personal Reference: Integration of behavioral finance and investment management,” believe behavioral finance works best when it is taken in a solution of feasible investment management that is firmly grounded in the idea of ​​investing in terms of goals. the financial advisory business is more and more towards the idea that individuals need to have personal references that make sense for them to achieve their investment objectives, Crosby said, and therefore away from the conventional approach to index investing. But stick with a program focused on the goals can be quite difficult for most people because they are distracted by the trappings of common behavior.
Ensure the success of an investment program based on the objectives requires that counselors help clients avoid some repetitive behaviors and poor who are against-productive. An integrated approach to the principles of behavioral finance in the context of a range of investment management can greatly improve the experience of the investor, Crosby said.
“We did a survey and found that 77% of financial advisors tell their clients about behavioral finance, which is a good thing,” said Crosby. But most advisors and their clients “lose knowledge when they need it the most,” he said, which is why behavioral finance should be integrated into a workable practical investment strategy.
Personal investment solution Benchmark Brinker Capital is designed in this direction. The product uses the principles of behavioral finance structuring portfolio strategies of investors in order to create purchasing power for investors while managing volatility. It focuses on the idea of ​​risk management, and “automates the delivery of behavioral finance” integrating science into an investment product multi-asset class divides assets – international equities, Canadian equities and fixed income securities, as well as some non-traditional asset classes – a set of different tranches, according to their content, “call risk level from top to bottom,” said Widger. This allows both manage and reduce the volatility that inevitably leads to negative behavior by investors and undermines investment objectives. Ultimately, it leads to an increase in the p