Morningstar Magazine - April/May 2018 - 31
Spotlight
Behavioral Finance
Stop Teaching, Start Coaching
Coaching to Mitigate Panic
34
37
Better Than an Algorithm
Advisors should focus on the
human side of investing.
OVERVIEW
Ray Sin, Samantha Lamas, and Michael Leung
With the rise of robo-advice, new regulations,
and other changes, it often seems like the
traditional role of the advisor-particularly that of
portfolio manager-is under threat. We believe,
however, that advisors are in an excellent position
to capitalize on these changes by building on
longstanding skills and roles. Being a good advisor
has always been more than selecting investments and managing portfolios. Psychology is an
essential part of working with clients. To quote
Benjamin Graham, "The investor's chief problem-
and even his worst enemy-is likely to be himself."
As investors, we all have behavioral biases,
such as overconfidence, confirmation bias,
and loss aversion, that lead us astray when
making financial decisions. Advisors, however,
are in a unique and powerful position to
help their clients overcome these. To capitalize
on the changing landscape, advisors need
to serve as behavioral coaches and help
clients navigate their biases and make more
rational decisions. Advisors help investors
cultivate good financial habits, stick to
their investment plans, and avoid emotional
responses that affect behavior and undermine
long-term success.
In this article, we will summarize the ways
in which the best advisors already serve
as behavioral coaches, and we'll offer additional
techniques to help advisors improve by
applying recent lessons from behavioral science
to their practice.
global.morningstar.com/Morningstarmagazine
31
http://global.morningstar.com/Morningstarmagazine
Table of Contents for the Digital Edition of Morningstar Magazine - April/May 2018
Contents
Morningstar Magazine - April/May 2018 - Cover1
Morningstar Magazine - April/May 2018 - Cover2
Morningstar Magazine - April/May 2018 - 1
Morningstar Magazine - April/May 2018 - 2
Morningstar Magazine - April/May 2018 - Contents
Morningstar Magazine - April/May 2018 - 4
Morningstar Magazine - April/May 2018 - 5
Morningstar Magazine - April/May 2018 - 6
Morningstar Magazine - April/May 2018 - 7
Morningstar Magazine - April/May 2018 - 8
Morningstar Magazine - April/May 2018 - 9
Morningstar Magazine - April/May 2018 - 10
Morningstar Magazine - April/May 2018 - 11
Morningstar Magazine - April/May 2018 - 12
Morningstar Magazine - April/May 2018 - 13
Morningstar Magazine - April/May 2018 - 14
Morningstar Magazine - April/May 2018 - 15
Morningstar Magazine - April/May 2018 - 16
Morningstar Magazine - April/May 2018 - 17
Morningstar Magazine - April/May 2018 - 18
Morningstar Magazine - April/May 2018 - 19
Morningstar Magazine - April/May 2018 - 20
Morningstar Magazine - April/May 2018 - 21
Morningstar Magazine - April/May 2018 - 22
Morningstar Magazine - April/May 2018 - 23
Morningstar Magazine - April/May 2018 - 24
Morningstar Magazine - April/May 2018 - 25
Morningstar Magazine - April/May 2018 - 26
Morningstar Magazine - April/May 2018 - 27
Morningstar Magazine - April/May 2018 - 28
Morningstar Magazine - April/May 2018 - 29
Morningstar Magazine - April/May 2018 - 30
Morningstar Magazine - April/May 2018 - 31
Morningstar Magazine - April/May 2018 - 32
Morningstar Magazine - April/May 2018 - 33
Morningstar Magazine - April/May 2018 - 34
Morningstar Magazine - April/May 2018 - 35
Morningstar Magazine - April/May 2018 - 36
Morningstar Magazine - April/May 2018 - 37
Morningstar Magazine - April/May 2018 - 38
Morningstar Magazine - April/May 2018 - 39
Morningstar Magazine - April/May 2018 - 40
Morningstar Magazine - April/May 2018 - 41
Morningstar Magazine - April/May 2018 - 42
Morningstar Magazine - April/May 2018 - 43
Morningstar Magazine - April/May 2018 - 44
Morningstar Magazine - April/May 2018 - 45
Morningstar Magazine - April/May 2018 - 46
Morningstar Magazine - April/May 2018 - 47
Morningstar Magazine - April/May 2018 - 48
Morningstar Magazine - April/May 2018 - 49
Morningstar Magazine - April/May 2018 - 50
Morningstar Magazine - April/May 2018 - 51
Morningstar Magazine - April/May 2018 - 52
Morningstar Magazine - April/May 2018 - 53
Morningstar Magazine - April/May 2018 - 54
Morningstar Magazine - April/May 2018 - 55
Morningstar Magazine - April/May 2018 - 56
Morningstar Magazine - April/May 2018 - 57
Morningstar Magazine - April/May 2018 - 58
Morningstar Magazine - April/May 2018 - 59
Morningstar Magazine - April/May 2018 - 60
Morningstar Magazine - April/May 2018 - 61
Morningstar Magazine - April/May 2018 - 62
Morningstar Magazine - April/May 2018 - 63
Morningstar Magazine - April/May 2018 - 64
Morningstar Magazine - April/May 2018 - 65
Morningstar Magazine - April/May 2018 - 66
Morningstar Magazine - April/May 2018 - 67
Morningstar Magazine - April/May 2018 - 68
Morningstar Magazine - April/May 2018 - 69
Morningstar Magazine - April/May 2018 - 70
Morningstar Magazine - April/May 2018 - 71
Morningstar Magazine - April/May 2018 - 72
Morningstar Magazine - April/May 2018 - 73
Morningstar Magazine - April/May 2018 - 74
Morningstar Magazine - April/May 2018 - 75
Morningstar Magazine - April/May 2018 - 76
Morningstar Magazine - April/May 2018 - 77
Morningstar Magazine - April/May 2018 - 78
Morningstar Magazine - April/May 2018 - 79
Morningstar Magazine - April/May 2018 - 80
Morningstar Magazine - April/May 2018 - Cover3
Morningstar Magazine - April/May 2018 - Cover4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019winter
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019fall
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019summer
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019spring
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20191201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20141011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20141201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120405
https://www.nxtbook.com/nxtbooks/morningstar/investorconference2012
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20091011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008catalog
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008winter
https://www.nxtbookmedia.com