The Personal Business of Financial PlanningFinance 101
In an ideal financial utopia, investors would make unbiased, rational choices based solely on risk tolerance (risk vs. return trade-off). They’d be consistent in their thought processes and free from internal and external influences.
However, we all know that’s far from the reality of today’s investor. Research shows that people frequently make financial and non-financial decisions based on emotion, replacing known facts with biases that can negatively affect results.
That’s where the study of Behavioral Finance comes in.
WHAT IS BEHAVIORAL FINANCE?
Behavioral finance takes the insights of psychological research and applies them to financial decision-making, shining light on changing emotional responses into cognitive ones.
In other words, the aim of behavioral finance is to help us better understand how emotions and biases can negatively influence investment decisions, then help us learn how to avoid those negative effects so that we can make more rational, values-based decisions.
Throughout my years as a Certified Financial Planner™ (CFP®), I have learned that managing emotions and making good decisions that are consistent with one’s values are two of the most difficult parts of achieving long-term goals. It’s that knowledge that drove me to pursue a specialised certification as a Behavioral Financial Advisor™ .
WHAT IS THE BEHAVIORAL FINANCIAL ADVISOR (BFA™) DESIGNATION?
The Behavioral Financial Advisor (BFA™) designation is a specialized program designed to educate financial professionals on the core concepts of behavioral finance, including application with real-world clients.
The program, developed by Kaplan and Think2Perform, trains advisors like me to help clients:
- Make better financial decisions through a rational, values-based approach,
- Be better for unplanned life events, and
Understand how traditional financial practices are driven by psychology and neuroscience.
HOW CAN A BEHAVIORAL FINANCIAL ADVISOR HELP ME?
The BFA™ designation better positions advisors to help clients understand and manage their emotions so that they can make more rational, values-based decisions that better support their long-term financial goals.
Of course, knowledge of behavioral financial advice does not replace financial planning. But we believe that it is equally as important that an advisor understands why emotions and investing don’t mix, and can help provide clients acquire the confidence needed to make decisions that are more aligned with what matters most to them.
QUEST FINANCIAL SERVICES: LET US BE YOUR GUIDE
At Quest Financial Services, we believe this designation represents the constant evolution in the financial and investment industries, and we take pride in the time and effort our advisors dedicate to honing their craft. Each of the designations held by our team equip our advisors to provide better, more personalized advice to each of their clients.
To learn more about Quest Financial Services’ founding member and managing partner Robert Cepeda, CFP®, BFA™, please click here.
to learn more about how we can help you feel more confident and empowered about the path you’ve chosen toward achieving your personalized financial goals.