The performance of financial markets is directly related to the sentiments of market participants. Positive market sentiment leads to a strong market whilst negative market sentiment drives a bearish one — which can lead to a financial crisis. Traditional finance methods fail to incorporate these psychological factors and usually assumes that the market is trading at irrational levels.

On the other hand, behavioural finance explains how fear, greed, hope, anger, sadness, happiness, panic, climate change and non-traditional factors affect the overall performance of a market. It is important to understand the psychology of the market before investing. Behavioural finance is a powerful tool that helps investors to build a successful investment portfolio in the current volatile market.

Behavioral finance is about how psychology influences the behavior of financial practitioners as well as ordinary people making financial decisions. This course looks specifically into behavioural finance from banking and wealth management aspects, from both individual and institutional perspectives in relation to investment decision and strategies.

The aim of the course is to establish a good understanding by banking and wealth management sales and relationship management teams of behavioural finance and decision-making biases as they deal with their clients’ wealth and transactions, both individuals and institutions. It covers individual and group decision-making, consumer psychology and market asymmetries, the role of human capital in asset portfolios, using a range of asset allocation methods, and having an awareness of the challenges facing institutional asset managers in a contemporary business environment.

You will learn about the wide range of preconceptions and information processing errors that influence people/ clients’ financial decision-making. The course starts with explaining what behavioral finance is and its impacts on financial markets. Then, it explores the most common self-deception biases, cognitive biases, emotional biases, loss aversion and herding bias that affect people as they make financial decisions. We will discuss their causes and potential measures you can take to manage them with your banking and wealth management clients.

This training course will be structured as a highly participative workshop, with market simulation, group work and case-study presentations.