What is Behavioral Advice / Behavioral Finance?
Behavioral Advice / Finance has existed for several years, working in conjunction with the field of traditional finance. In brief, financial advice is based primarily on Nobel Prize-winning, modern portfolio theory. All learnings related to asset allocation, efficient frontier and model portfolios remain important. However, all are based on the premise that investors and consumers make rational decisions without bias and essentially will trade-off decisions based on risk and reward potential. Behavioral Advice involves the integration of traditional finance, behavioral finance and neuroscience. While conventional theory predicts that people behave rationally, research has proven that people frequently behave irrationally. Irrational behaviors are often stimulated by extreme emotions, either positive or negative. With a focus on Behavioral Advice, LAG helps financial advisors understand that people often behave in an irrational, biased-manner. More specifically, LAG points out that peop
