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Behavioural Finance: Managing Clients' Biases for Better Investment Decisions

About This Course

Financial literacy and behavioural biases are critical factors affecting the financial decisions and behaviours of investors. Mainstream finance theory is based on two fundamental assumptions: “Individuals make rational decisions” and “individuals are without prejudice in forecasting the future.” However, research has shown that these assumptions may be flawed. Behavioural finance is a field that has emerged as an attempt to understand how emotions and cognitive errors affect the decision-making processes of investors.

This course identifies and explains the effect of behavioural and emotional biases on investor’s investment decisions. It then develops various approaches to mitigate the effects of emotional and behavioural biases on investment policy and asset allocation decisions. We then turn to the concept of bounded rationality and evaluate its effects on investment decisions. A method to understand investor behaviour is to classify them according to personality types. We examine the advantages and disadvantages of the various classification approaches. To wrap up, we look at how to use behavioural finance to improve the adviser–client relationship to ease the process of helping investors make better investment decisions.

Who Should Attend

Relationship Managers in Private Banking

Learning Outcomes

  • Monitoring the effect of behavioural and emotional biases on investment decisions
  • Develop approaches to mitigate the effects of behavioural biases on investment policy and asset allocation decisions
  • Evaluate effects of bounded rationality on decision-making
  • Classify investors according to personality types
  • Advantages and disadvantages of various classification approaches
  • Using Behavioural Finance to Improve the Adviser–Client Relationship

About IBF Certification

This course addresses the following Technical Skills and Competencies (TSCs) and Proficiency Level (PL):

  • E2. Behavioural Finance - Level 4

Participants are encouraged to access the IBF MySkills Portfolio to track their training progress and skills acquisition against the Skills Framework for Financial Services. You can apply for IBF Certification after fulfilling the required number of Technical Skills and Competencies (TSCs) for the selected job role.

Find out more about IBF certification and the application process on https://www.ibf.org.sg/certification/Pages/Why-be-Certified.aspx

Part 1: The effect of behavioural and emotional biases on investment decisions

  • Types of behavioural biases
  • Impact on investment decisions

Part 2: Investment policy and asset allocation: How to mitigate behavioural biases

  • Investment Policies & Asset Allocation
  • The impact of behavioural biases
  • Methods to mitigate behavioural biases

Part 3: Bounded rationality and its impact on decision making

  • Bounded rationality
  • Cognitive errors
  • Effect on the decision-making process

Part 4: Investor classification based on personality types: advantages and disadvantages

Part 5: Using Behavioural Finance to Improve the Adviser–Client Relationship

  • Establishing the relationship
  • Profiling the client
  • Making recommendations
  • Evaluating performance and renewing the relationship

Part 6: Summary

Assessment - MCQ

Alvin Yap

CFA

Alvin has over 27 years of investment experience. His experience ranges from investing in listed securities (enquiries, bonds, currencies, options) and unlisted to structured investments including venture capital/private equity. He has invested funds for institutions, private companies and high net worth individuals. He has worked for major institutions including the Government of Singapore Investment Corporation, American Express Asset Management, Emirates NBD Bank, UBS AG, and OCBC Private Bank. In 2000, he set up several VC funds anchored by major government institutions including TIF Ventures (Singapore Economic Development Board) and Khazanah Berhad (investment arm of the Malaysian government). Alvin holds the CFA charter since 1994. He graduated Summa Cum Laude in Business Administration from Boston University in 1989. Over the last 6 years, he lectures on Investment Management at University of London (External Programs), Global Issues for the Financial Professional (MSc in Professional Accountancy – UOL/LSE London) and provides corporate training at SMU University (Singapore) for private bankers.

During his time at GIC, Alvin had explored the deployment of neural networks in finance with the National Science and Technology Board. Alvin currently heads the fund management team at Avallis Investments Pte Ltd, a LFMC based in Singapore. The firm will launch an artificial intelligence-based fund that leverages on deep learning computer technologies. The system trades autonomously and is self-evolving in its trading rules as market conditions change. Alvin also sits on the board of Erudite Engineering Services Ltd, a Bangkok based technology firm that is a university spinoff from the high-performance computing department. Erudite specializes in research in computational finance and deploys artificial intelligence in financial markets for advisory, asset allocation and autonomous trading.

IBF-STS

This programme has been accredited under the IBF Standards, and is eligible for funding under the IBF Standards Training Scheme (IBF-STS), subject to all eligibility criteria being met. Candidates are advised to assess the suitability of the programme and its relevance to participants’ business activities or job roles.

For latest development on the Enhanced Funding Support for IBF-STS, please visit the IBF Standards Training Scheme site.

About the IBF Standards

The IBF Standards are a set of competency standards for financial skills. These Standards are developed in partnership with industry leaders and provide a professional development and skills roadmap for financial sector practitioners to excel in their respective job roles. They currently cover 12 industry segments in the financial sector.

About the Institute of Banking and Finance Singapore

The Institute of Banking and Finance Singapore (IBF) is the national accreditation and certification agency for financial industry competency in Singapore under the IBF Standards. Find out more on www.ibf.org.sg

Early Bird Discount

Enjoy 10% early bird discount when you register one (1) month before the course commencement date.

Behavioural Finance: Managing Clients' Biases for Better Investment Decisions

IBF-STS

S$ 1,300

Pending Accreditation
Course Features
  • Duration
    1 Day
  • CPD
    8 Hours
  • Job Role
    Relationship Manager
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