Using Behavioral Finance to Shape Financial Planning

Avoiding cognitive illusions, biases, and intuition that lead to irrational decisions

By Justin Goldstein, AIF®, Director, Bronfman Rothschild Plan Advisors

The field of behavioral finance is not new, but employing its core tenets is gaining favor among investors, advisors, and plan sponsors who recognize its value in influencing sound financial decisions.

Emotions can have a powerful impact on financial decisions and can lead to errors resulting in losses or missed opportunities over a lifetime of investing. Understanding how many of us make decisions can help individuals avoid errors and instill the discipline needed to build and maintain wealth. Plan sponsors can also use this knowledge to design retirement plans to help reduce mistakes by plan participants and maximize long term outcomes.

Interested in reading about behavioral finance and financial planning?

Tell us a little about yourself to learn more:

  • The difference between Behavioral Economics theory and Classic Economic theory
  • How investors demonstrate examples of irrational behavior defined by behavioral economists
  • How plan sponsors can use behavioral finance lessons to help their plan participants