Our purpose is helping professional advisors integrate insights about humans (read: clients) into their financial advice to make it more relevant, engaging and robust.
The insights we will highlight come from serious behavioral economics – the marriage of standard economics and cognitive psychology.
Why?
Behavioral economics heralds a new era of understanding clients, scientifically. It will replace what is convention today in less than 24 months. Numbered are the days of client questionnaires – welcome to the age of data and monitored decision making.
Economic research makes clear that, to know our clients, we can’t rely only on what they say. Rather, we must study what they do. Whether it’s trying to understand someone’s risk tolerance or loss aversion (or ambiguity aversion or present bias…the list goes on), the information we need is locked in people’s actions, not their words. And it’s our collective job to release it.
In this blog, our goal is to shine a light into previously dark areas of client understanding. Along the way, we’ll point out vulnerabilities in conventional thinking. We aim to deepen your understanding of human behavior and to challenge your thinking and assumptions. We want to provoke those of you whose success has come from putting clients first to join us and imagine an industry where your intuition is bolstered by the best science and tools available.
Connecting Academic Work to Everyday Practice
To do that, we'll bridge an important gap between serious academic work and everyday practice.
Who will help? We are lucky enough to have on our team Shachar Kariv, Professor of Economics at UC Berkeley, and Dan Silverman, Professor of Economics at Arizona State University—two leaders in behavioral and micro-economics. They have spent a combined 30 years on research that is bringing science to human (client) understanding. Explore Shachar's research. Explore Dan's research.
We also have Bernard Del Rey, a strategist and advisor to advice and investment organizations, who has been helping firms transform financial advice into a profitable and powerful client-focused service.
You couldn't ask for better trail guides.
So whether we're introducing you to the latest inventions that reveal client preferences, or showing you what social preferences of future doctors reveal about career choices, or illuminating client spending behaviors by studying spikes in gas prices—and these posts are all coming—you can always look to this blog for serious scientific work delivered in a tangible and useable way. We hope you'll enjoy the ride as much as we do.
Cheers, and Happy New Year from the Capital Preferences Team.
