Behavioral Finance

I was recently asked how to instill accountability and urgency in this next generation. Set expectations and offer guidance. Remember, this is a generation that largely grew up not speaking to other people and definitely not calling anyone.

When portfolios become standardized, investor experience becomes standardized right along with them, even though almost nothing else about those investors is standard. Their goals, tax exposure, risk tolerances, and individual spending needs are too individualized to be captured by many models that purport to be customized.

I’m always asked for scripts. You don’t want a script. You want to be natural and approach clients in a manner that fits you. Practice, practice, practice until it seems natural and comfortable. Authentic is always best.

I recently spent a week working with advisors and team members on a variety of things, all human-element related. The financial business is one of numbers and quantifiable results, but we all know it is much more than this. This week’s column will encapsulate my aha moments from this week.

Outlining clear expectations for success — desired outcomes that are both quantifiable and qualitative. It means setting objectives to meet these desired outcomes every week and then checking in to see to see if they met them.

The deeper promise may be in human-AI collaboration. AIs may prove most valuable not as autonomous traders but as a counterweight to our very human behavioral biases such as overconfidence, recency bias, and the tendency to bet too big on views that feel certain but aren’t.

2008. 1929. 1907. 1893. These dates strike fear into the hearts of investors. Panics, crashes, and bear markets have been part of the investing ecosystem for as long as markets have existed. Some say they are the price of progress — others, a flaw in the system. Whatever you think of periodic market crashes, they’re here to stay.

The combination of succession planning — where the lead advisor wants to have a successful and well-funded retirement and the successors want to get paid for taking over — along with the riches of the market over the last few years are all adding up to significant unrest within many teams.

As equity compensation becomes a larger component of employee wealth, financial advisors are helping clients navigate the complexities of stock options, RSUs (restricted stock units), and ESPPs (employee stock purchase plans). Here, three financial advisors discuss how to balance the upside potential of equity awards with tax planning, concentration risk, diversification, and strategic exercise decisions.

to come

Wealth management firms are aware of the looming retirement wave and have put real effort into mitigating it through recruiting, training, succession planning, and technology to modernize the advisor workflow. But what’s truly at risk of being lost is the judgment that senior advisors have accumulated over decades

For this week’s column, in the wake of the holiday celebrating our country’s independence, I’ll share some independent thinking for advisors to implement, whether it be with their teams, in their practice or with their clients. I’ll keep it brief in the hopes you will find one or two things that resonate.

Widowhood does not happen on paper. It happens in the middle of grief, changing income, tax questions, family expectations, housing decisions, administrative demands, and a profound shift in identity. The math may still work, but the human operating system has changed. And that is why advisors need to stress test — not only for portfolio survival, but for survivor usability.

After years of working with advisors and studying client behavior, the reasons clients leave come down to three core patterns. They are predictable. They are preventable. And they almost always trace back to a conversation that never happened in the first meeting.

What is remarkable about Livermore is that his rules are still incredibly valuable. The markets he traded in no longer exist. The technology, the communication speeds, and the regulatory framework of his day are unrecognizable compared to today. But the principles and behavioral patterns he identified are as operational in 2026 as they were a hundred years ago.

If your heart and mind tell you to go looking for someone older because that’s going to fit your culture more effectively, by all means search in that direction. Just don’t give up on younger, next-generation team members without making sure you have given them every opportunity to succeed.

I have run sales teams, developed sales teams, trained salespeople and trained advisors for many years. Education is your best bet, but if people are focused on growth at all costs, sometimes they aren’t in a position to really listen.

No one can guarantee which choices will be best for your financial future. Do your best to make them, not out of anxiety over the broader economy, but in the context of your own family’s needs and finances.

I was asked by an advisory firm to speak to their clients at their recent client event. I was able to share the “Five Secrets of Human Behavior,” and all attendees received my similarly named book. In today’s column, I’ll outline these secrets and share why they matter from a leadership perspective.

The biggest problem I find is that advisors don’t have the time they need to focus on growth. Sending out a mass invite via LinkedIn is fast and easy, but it doesn’t mean it is the most effective action you can take.

Advisors now understand that clients expect a truly personalized experience. Clients no longer accept generic advice; they demand bespoke strategies, tailored communication, and engagement aligned with their unique needs and life stages.

In his new book, “Risk & Reward: How to handle market volatility and build long-term wealth,” Ben Carlson relies on history to defend investing in U.S. stocks. Carlson calls the U.S. stock market “the greatest wealth-building machine ever created,” and nudges his readers into thinking its success will continue.

Probably the most popular insight to make its way from finance theory into everyday usage is that "diversification is the only free lunch" in investing. The idea dates back to Harry Markowitz in 1952. He, and those building on his work, demonstrated that in an efficient market, investors shouldn't earn extra return for bearing company-specific risks that can be diversified away.

It’s so hard in our industry to “benchmark” things like comp, benefits and work-from-home philosophies, because if you show me 15 teams or firms, I’ll show you 15 different ways to answer these questions. I know the WFH question is a big one, and many teams are struggling with it.

Goldman Sachs announced a partnership with Anthropic in early May, though you probably shouldn’t view it as just a cool innovation story. It is infrastructure in motion. When institutions like Goldman move, pay attention to what problem they believe they are solving.

Leading with bad news can feel wrong and even confrontational at some level, but the psychology research supports it, the behavioral finance supports it, the career math supports it, and the clients who stay through multiple cycles apply the final confirmation stamp.

Some people do much better with change than others. It isn’t that they can’t change or they actively resist it. Rather, they experience more fear, more concern and they need more clarity about what the change means to them.

Investors need to understand what they own, how it may perform in different environments, and why it is structured the way it is. When advisors build this education into their work, it gives clients the discipline and expectations they need to stay the course when volatility rears its head.

The percentage-of-assets fee is so embedded in advisory economics that most firms treat it as a fixed constant rather than a business decision. It shapes how you staff, how you plan, and how you define the relationship with clients. But the AUM model is neither as old nor as inevitable as it feels.

I’m all about trying to build bridges and fix things, and I am also a realist. I often tell clients there is a right way, and then there is what you can get done within your environment. I’ll always lean toward the second one.

Scalable personalization means saving time while not sacrificing the “secret sauce” that is unique to your practice. Time savings can come from scaling portfolio construction via model portfolios or direct indexing, adding tools or talent to complement strengths, and using technology like AI.

Listening is a skill that can be taught, can be learned, and can be practiced. If a client doesn’t think their advisor is really listening to them, they might take that opportunity to find another advisor who does.

If you read my column, you know I am a proponent of following the SHIFT format. First, get the team together to identify who you want to be as a team and what success looks like to you. Make sure everyone is headed toward the same outcome and cares about the same goals.

You don’t have to agree with Chater and Loewenstein’s “crowding-out” hypothesis or their policy prescriptions to benefit from It’s on You, which will, at a minimum, allow the reader to identify and deconstruct i-frame PR when they come across it.

As the spring session for my graduate class, Leadership Lab, comes to a close I am in Chicago working with middle management leaders in the financial advisory space on leading teams. It seems appropriate at this time to offer some reminders about simple things you can do to be a better leader for your team.

Every prospect is different. They have different interests, different decision timelines, and different levels of engagement. Treating them all the same because your CRM can't segment effectively is leaving money on the table.