Better Supporting Clients with Behavioural Finance #2: Investment Advisory

What role does behavioural finance play in your daily work as an Investment Advisor?

If I had to briefly summarise my job, I would say it consists of taking as little risk as possible for my client while seeking the maximum returns. To achieve this dual objective, we have a very clear method called Dialogue & Asset Allocation, which involves a lot of education and contextualisation.

We listen to and question the client, understand their profile and wishes, then explain the issues, decode macroeconomic movements… All of this allows us to define together an asset allocation plan. The key is to ensure the client’s proper understanding while engaging in a dialogue about their risk tolerance and potential loss. This first phase is crucial because it is an opportunity to quickly identify potential biases and work to limit their impact.

Behavioural finance has helped me put definitions and words to the biases I noticed in my exchanges with clients. Moreover, our interactions often take place at very significant and decisive moments in their lives. Take, for example, the sale of a business. We meet entrepreneurs who have taken risks all their lives and who, overnight, entrust us with the fruit of a lifetime of work. This process requires a great deal of trust, it demands a clear method and a lot of education to reassure and advise them in the best possible way.

What biases do you encounter most frequently?

One of the most common is regret aversion, often expressed as the famous FOMO (Fear of Missing Out) — the feeling of “missing an opportunity.” It affects clients who follow financial news from afar and react to sometimes very partial signals. This bias often overlaps with herd behavior: “All my friends bought these stocks — why didn’t you recommend them to me?”

Periods of tension amplify these reactions. Major geopolitical or political developments and periods of uncertainty  can heighten market volatility and intensify impulsive behavior. When markets rise sharply or fall abruptly, some clients feel compelled to “do something at all costs”: this is the action bias.

These are the moments when our role becomes crucial: showing that sometimes the best course of action is not to give in to emotion, but to step back. We then explain the rationale behind our recommendations and, when needed, reassess the asset allocation.

How do you support your clients to improve their decision-making?

As investment managers, we benefit from two decisive safeguards:
-an emotional distance that clients cannot have regarding their own wealth;
-a collective decision‑making process, enriched by cross‑analysis from the team and the expertise of our specialists.

Behavioural finance brings essential value to investment advisory by providing a clear framework to understand clients’ emotional reactions to risk and their wealth more broadly. By identifying cognitive biases and incorporating them within a structured approach, we help rationalize decisions. Our methodology thus becomes a powerful lever for supporting clients with confidence, even in the most turbulent market phases.

Read the first article of the series: Better supporting clients with behavioral finance #1: wealth planning