Easing emotion in client investment
Behavioural finance software company Oxford Risk estimates the average investor forgoes around 3% a year in lost returns annually due to short term behaviours and emotional decisions.
Over a lifetime the lost returns from money sitting on the side-lines pile up and investors make avoidable losses from timing mistakes such as buying high when times are good and selling low when times are bad.
Greg Davies, head of behavioural finance at UK-based fintech Oxford Risk, says financial advisers are ideally placed to help people cope with the emotional and psychological investing roller-coaster. However, managing the investor is just as, if not more, important as managing investments themselves, he says.
Oxford Risk believes many wealth managers and financial advisers need better systems and tools to support clients particularly, in light of recent events such as the financial impact of COVID-19, rising inflation and high levels of volatility.
Recently, the software company conducted an online survey of 50 Kiwi wealth managers (collectively managing $145 billion in assets), finding that 58 per cent believed there will be pressure over the next five years to compensate clients for not doing enough to understand risk profiles.
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
![[The Wrap] What the heck is happening at the FMA?](https://goodreturns.publit.io/file/c_fill,w_300,h_200/a6c3bc06-6401-44de-96e2-286c090e132d.jpg)