A Behavioral Finance Approach adds Alpha to Client Portfolios

Financial DNA, Advisor Client Meeting, Behavioral FinanceFor a long time many advisors and financial services firm leaders have questioned the value of the softer side approach such as behavioral finance. A recent Vanguard study reports that a behavioral finance approach can help advisors add 1.5% of alpha to a portfolio. That is advisors need to get the clients to focus on asset allocation rather than chasing performance.

Refer to the full article in InvestmentNews.

This type of research outcomes is also supported by Dalbar studies which show that there is a substantial gap between returns investors make from doing themselves versus investing in market index funds.

Clearly, advisors need to present themselves as being behaviorally smart and then explain their role to clients as being the behavioral guide ? in essence the person who saves the client from themselves.


Hugh Massie is a Human Behavior Strategist, successful entrepreneur and a leader of the behavioral awareness revolution in businesses worldwide for unlocking human potential. He has 26 years of unique and diverse international experience in developing client centered human behavior solutions. Visit the DNA Behavior website to learn more about managing behavior through greater self awareness.

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