Have you ever stopped for a second and considered why you behave the way you do? Why do you do one thing instead of another?
Why do you choose that brand? Why do you always have time for a conversation about one topic, but never have time for another?
Research tells us that those deeply held beliefs and emotions are what shapes our behaviour. And, critically, over time our behaviour determines our outcomes. Our lives seem so simple when you write it out like that, right?
We could even turn it into a life equation, Outcomes = (Belief + Emotion) + Time…
Perhaps, we truly are the masters of our own destiny. We have found the answer to the meaning of life and Douglas Adams never needed to create Marvin, the Paranoid Android!
No matter how disciplined we might think we are, or how much we would love to believe we can leave our emotions at the door to make the logical decision, that is simply not always the case. We are human after all.
Our beliefs and emotions have a persuasive way of weaving their way into our behaviour through biases. For investors this is known as Behavioural Finance, and it’s these behavioural biases that prevent us from achieving the optimal outcome or the best possible return.
But what if we could add another input to that equation?
+ Financial Advice
Over the next few months, several Viridian Advisory advisors are using their considerable experience to work through how adding a financial advisor to the equation can help clients rise above bias and help ‘you live the life that you choose’.
From familiarity bias to anchoring…
We won’t be able to cover off on every bias, there are simply too many! Our advisors will select what they believe to be some of the most notorious biases at work in behavioural finance.
It can be argued that you’ve already started rising above bias just by reading this article as becoming aware of your biases can reduce their effect by up to 29%.
In our first article to be released this week, Executive Advisor David Pitt will look at the anchoring bias.