09.26.23

How To Keep Clients on Track by Understanding Their Biases

by: Tracey Longo

The ability to understand investors’ behavioral biases to determine what may get in the way of their financial success can be one of the most valuable tools advisors can use to keep clients investing for the long-term, according to Rodney Jones, a senior investments leaning consultant at the Franklin Templeton Academy. Almost all investors have behavioral biases “and if we’re being honest, so do we,” Jones said during a webinar on investor barriers sponsored by the Association of African American Financial Advisors and JPMorgan. Jones said investors have six investor biases, according to Franklin Templeton research. The most prevalent are availability bias, herding, loss aversion, present bias, anchoring and home country bias. By getting to know clients, you should be able to answer objections from clients even before they bring them up, said Jones, who encouraged advisors to use a story of their own bias to help investors relate to what can go wrong when you use limited information to make a decision.

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