Are you wondering what behavioral finance is, and what it refers to?
Elizabeth McFadden is a financial planner and mediator with an avid
interest in the psychology behind financial behaviors. She, like many of
her colleagues, has been studying a relatively new field called
behavioral finance. This field of study attempts to explain why people
make irrational financial decisions, what motivates change and what
keeps clients immobile by combining cognitive and behavioral psychological theories with convention finance and economics.
This is a necessary field of study because it addresses how market decisions are made and what aspects drive client behavior. Behavioral finance can be studied on two separate levels, an individual level and a market level. Some examples of individual irrational financial decisions are credit card usage, massive revolving debt loads, and large purchases that affect a person’s long-term financial standing. Economists and financial professionals are studying the social, psychological, and emotional factors that drive people to make these decisions, and how various markets contribute to those decisions.
Behavioral finance on a market level refers to the errors that markets can make, which result in market inefficiencies. This field of study focuses on market trends, bubbles, and crashes and what contributes to these types of market behaviors. It focuses on the habits of investors and the different emotions and social aspects that determine the way in which they participate in the market.
This field of study allows professionals to understand what factors drive individual decisions and the various market trends. Financial planners, such as Elizabeth McFadden Memphis, use this information to better understand the financial situations of their clients.
This is a necessary field of study because it addresses how market decisions are made and what aspects drive client behavior. Behavioral finance can be studied on two separate levels, an individual level and a market level. Some examples of individual irrational financial decisions are credit card usage, massive revolving debt loads, and large purchases that affect a person’s long-term financial standing. Economists and financial professionals are studying the social, psychological, and emotional factors that drive people to make these decisions, and how various markets contribute to those decisions.
Behavioral finance on a market level refers to the errors that markets can make, which result in market inefficiencies. This field of study focuses on market trends, bubbles, and crashes and what contributes to these types of market behaviors. It focuses on the habits of investors and the different emotions and social aspects that determine the way in which they participate in the market.
This field of study allows professionals to understand what factors drive individual decisions and the various market trends. Financial planners, such as Elizabeth McFadden Memphis, use this information to better understand the financial situations of their clients.
