H.65 Client and planner attitudes, values, biases

Question 1

A field of study that examines how psychological influences and biases affect financial decision-making.

Answer 1

Behavioral Finance

Question 2

The tendency for individuals to prefer avoiding losses over acquiring equivalent gains, often leading to risk-averse behavior.

Answer 2

Loss Aversion

Question 3

The tendency to seek out, interpret, and remember information that confirms existing beliefs while ignoring contradictory evidence.

Answer 3

Confirmation Bias

Question 4

The tendency to prioritize immediate rewards over long-term benefits, leading to procrastination in saving or investing.

Answer 4

Present Bias

Question 5

An individual’s ability and willingness to endure market fluctuations and financial uncertainty in pursuit of returns.

Answer 5

Risk Tolerance

Question 6

The reliance on an initial reference point when making financial decisions, even if the reference is arbitrary or irrelevant.

Answer 6

Anchoring Bias