Business Reasons for Using Behavioural Finance

In the interview, Greg Davies, former head of behavioural quant finance at Barclays and now head of behavioural science at Oxford Risk, discussed the phenomenon of behavioural finance. As an entry point for understanding human behaviour, Greg used the story of Ulysses and the Sirens. If you're unfamiliar with Ulysses' mission, he is required to navigate his ship past the island of the Sirens. When sailors approach the singing Sirens, they are lured into an accident when they crash on the rocks as they hear the song. BookMyEssay is offering Behavioural Finance assignment help in affordable prices.

The singers wanted to be heard, but Ulysses didn't want to endanger his ship by hearing them. In order to prevent his movement, he had his crew bind him to the mast and use beeswax to close up his ears.

This story Greg uses to demonstrate that perhaps we can build more effective frameworks and systems by having some insight into our tendencies, and in turn make better decisions by knowing what they are. Making better decisions by 'pre-thinking' them almost forces us to do so. I was really touched by that idea.

Implementation of The Theory

In particular, I've used behavioural insights on the Meaningful Academy site, and through Meaningful Money in general. Courses are designed to help you build wealth, plan for retirement, and understand financial foundations.

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The course will also include a section on behavioural finance and biases to be aware of. As a result, I'm using the tools from Be-IQ, a firm that provides behavioural insights.

An app called Beam helps people to understand not only their risk behaviour, but also how they perceive it. The participants can gain real insight into their finances simply by playing 10 games over 25 minutes. In addition to the app, I have access to Beacon's advisor dashboard.

Due to the Coronavirus, various lockdown restrictions, and the initial market volatility, the period in history we're in right now is exactly the kind of time in which an in-depth insight into client behaviour is really valuable. Almost all advisors instinctively know in any given situation which clients might feel anxious. Yet behavioural finance adds a lot of texture to the discussion.

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One of the biggest benefits of behavioural insights for advisers is being able to set up the right things for new clients who they don't know very well. You should have a pretty good understanding of how clients work if you've had them for 10 or 15 years. You are failing them in your role as an advisor if not. It may be difficult for you to get that information when you're working with a new client.

My Personal Experience with Risk

In many ways, my career was shaped by a particular client of mine, a firm client for many years, but who I only knew as a newly hired attorney in 2007. It was a successful company that he sold for multiple millions of pounds. My perception was that he was a risk taker, and his risk questionnaire responses at the time showed that he was moderately adventurous to balanced.

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