If an investor has an emotional bias and is very wealthy, but the bias is so bad there is a high probability of not meeting their investment goals.
Im assuming that a high probability of not meeting investment goals is a trump card and in this case, you would moderate.
Another question: on the Cognitive/Wealthy and Emotional/Non-wealthy, would you pick in and choose moderate and adapt by bias based on lifestyle risk?
cognitive and wealthy I’d lean more to adapt. emotional and non wealthy I’d moderate due to standard of living risk
I think SLR is most important
Since english isn’t my native language, could someone please define the meaning of the words ‘moderate’, ‘adapt’, and ‘accommodate’ in the context of behavioral finance and when to use which one.
If their bais is cognitive and they are wealthy id say moderate and adapt because congitive baiss are easy to moderate with education.
Moderate means you attempt to educate the client that basicly their way of thinking is incorrect, so you would want to educate them to change their way of thinking in regards to their portfolio.
adapt would be you wouldnt educate and try and come up with a plan based on their emotional baies, emotionals biases makes them stuborn and hard to deal with so you adapt because they most likely wont listen to what you have to say