Recently, I had the opportunity to represent Boyer & Corporon Wealth Management at two prominent industry conferences.
In September, I attended the Financial Planning Association’s (FPA’s) Annual Conference in Seattle. It is the largest gathering of CFP® (CERTIFIED FINANCIAL PLANNERTM) professionals in the United States. Attending allows us to continue our education, connect with peers and gain new resources.
Then in November I attended Charles Schwab’s Annual IMPACT Conference in Denver. This event is for the RIA (Registered Investment Advisor) community to gather for collaborative learning on key industry issues and best practices. Keynote speakers included Ben Bernanke, former Federal Reserve Chairman and George W. Bush, the 43rd President of the United States.
At these types of conferences there are numerous educational sessions from which to choose, and at both I attended sessions focused on behavioral finance. Several things were highlighted, such as the following:
- Investors tend to dislike losses more than they like gains of an equal amount.
- Investors tend to “anchor,” which means they evaluate a security based on what they paid for it versus its current value relative to other opportunities. As a result, the investor tends to hold on to losing investments longer than they should because they are hesitant to realize those losses.
- Having too much financial information can result in unintended consequences. More information is available today thanks to smartphones and Internet access. Our brains detest uncertainty, and much of this “information” does little more than provide a false sense of certainty.
- Contrary to an assumption made by the Efficient Market Hypothesis (one of the most popular market theories), investors are not rational. Rather, they have emotions and urges, which tend to result in mistakes. In reality, investors often panic when markets are declining (sell low), and become euphoric by the prospect of future financial gains when markets are increasing (buy high). In other words, their “risk tolerance” changes with market conditions.
While I also attended sessions focused on other topics, these focused on behavioral finance in particular had a few aspects which struck a chord with me. They reminded me of two important things:
- At Boyer & Corporon Wealth Management, I know that I can rely upon our highly qualified Portfolio Management team to ignore ratings driven headlines and remain mindful of the potential for emotional flaws in our security selection.
- BCWM’s unique process for calculating our clients’ need for investment risk, irrespective of current market conditions is proprietary. Our long-time clients have learned we refer to this as their “level of risk,” and our Wealth Advisors monitor it regularly.
Not only did attending these two conferences validate many of our firm’s current processes, but it also gave me (and ultimately our entire team) new takeaways to be an even stronger advocate for Boyer & Corporon Wealth Management clients.
This information is provided for general information purposes only and should not be construed as investment, tax, or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.