In Be-IQ’s ten-part webinar series, which is available to stream On Demand, we explore fourteen behavioural biases. In a section named ‘behavioural deep dives’, we delve into the specifics of what a particular behavioural bias is, how it manifests itself, and why this matters in relation to Financial Planning.
Episode 2 of 10 starts our behavioural deep dives, and kicks off by looking at Confirmation Bias and Knowledge/Confidence.
EPISODE 2: CONFIRMATION BIAS & KNOWLEDGE
Every episode of The Foundations of Behavioral Coaching starts with a recap of the previous episode, which provides a reminder of what we discussed before, and how it links into what will be discussed in this particular episode. After a short recap, we start by looking at:
This episode starts by looking at what Confirmation Bias is, and using examples of real-life confirmation bias, show how it can be a pervasive factor in decision making. In looking at Confirmation Bias, the episode provides examples of where experts show susceptibility to this bias, and what that means for the people they provide their services to. This includes doctors, and we look at great research carried out by Jerome Groopman, a professor of medicine at Harvard Medical School.
We then look at Confirmation Bias is relation to money, and how it can impact the choices people make in relation to their financial wellbeing.
Now, whilst knowledge isn’t a behaviour, it does have a significant impact on many behavioural biases that we will be discussing during the series. In particular, we look at the distinction between subjective knowledge and objective knowledge, and how this can influence what people think they know, versus what people really do know.
This then leads on to looking at how knowledge impacts people’s confidence, in particular confidence around their financial knowledge and financial decision making abilities. We share research that highlights what people ‘think’ they know in relation to financial products and services, and what they really ‘do know’, are often worlds apart. This is a real concern for those providing regulated financial advice, especially if the fact gathering process is based off a process of subjective questioning.
WHAT DOES IT MEAN FOR FINANCIAL PLANNERS
We wrap up the episode by looking at what this means for Financial Planners and how understanding these behavioural tendencies, plus learning how to make the inputs into decisions as objective and as unbiased as we can, helps people reach more optimised financial outcomes.
Knowing where people sit in relation to behavioural bias strength, allows us to change or adapt the narrative we deliver. It helps us know who to speak to, when to speak to them, and what to speak to them about.
INTERESTED IN WATCHING EPISODE TWO?
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