Behavioral Biases in Private Wealth Management: Addressing Loss Aversion and the Endowment Effect

As a private wealth manager, you are working with a client, Lisa, who has a significant amount of wealth inherited from her late father. Lisa is facing difficulties in managing her investments due to emotional attachments to certain assets, particularly the family business that her father founded. Additionally, she is apprehensive about taking on investment risks following a market crash that occurred shortly after her inheritance was received.

Your task is to discuss how behavioral biases, particularly loss aversion and the endowment effect, are affecting Lisa's decision-making. Explain how these biases manifest in her investment choices and suggest strategies for addressing these biases to help Lisa achieve her long-term wealth management goals.