Behavioural Aspects of Financial Advice

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AAM.10.1007.978-981-19-5546-4_11.pdf (248.38 KB)

Date

2022-07-25

Authors

Richards, Daniel

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Publisher

Springer
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Abstract

As financial products and financial markets become more complex, there is an increase in people seeking out financial advice to make important financial decisions. Financial planning is emerging as a profession that provides clients with comprehensive financial plans to achieve their financial goals. Yet the practice of providing financial advice is an under-researched topic and worthy of more interest. This chapter reviews behavioural research to provide insights into financial planning. It accomplishes this in two ways. Firstly, it reviews behavioural research on how people make financial decisions, showing that the concepts of the disposition effect, home bias, and mental accounting are relevant for financial planners who want to understand their clients’ behaviours. Secondly, the chapter reviews research on the advisor-to-advisee relationship covering the topics of conflicts of interest, disclosure, and persuasion, which inform the process of providing financial advice. Overall, behavioural research can offer unique insights into financial planning. This knowledge should be developed further and incorporated into the financial planning curriculum.

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Users may only view, print, copy, download and text- and data-mine the content, for the purposes of academic research. The content may not be (re-)published verbatim in whole or in part or used for commercial purposes. Users must ensure that the author’s moral rights as well as any third parties’ rights to the content or parts of the content are not compromised. This is an Author Accepted Manuscript version of the following chapter: Richards, D., Behavioural Aspects of Financial Advice, published in Behavioural Business, edited by Janneke Blijlevens, Meg Elkins, & Ananta Neelim, 2023, Springer reproduced with permission of Springer Nature Singapore Pte Ltd. The final authenticated version is available online at: https://doi.org/10.1007/978-981-19-5546-4_11

Keywords

Financial planning, Financial advice, Bias, Conflicts of interest, Disclosure

Citation

Richards, D. (2023). Behavioural Aspects of Financial Advice. In: Blijlevens, J., Elkins, M., Neelim, A. (eds) Behavioural Business. Springer, Singapore. https://doi.org/10.1007/978-981-19-5546-4_11

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https://doi.org/10.1007/978-981-19-5546-4_11
 https://hdl.handle.net/10315/43669

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