Behavioral Factors in Private Wealth Management

As a private wealth manager, you are tasked with developing a financial strategy for your client, Laura, a 58-year-old entrepreneur who successfully sold her business. With a net worth of $10 million, she is now contemplating how to invest her wealth to secure her retirement and fund her philanthropic interests. However, Laura has expressed concerns about market volatility and frequently references her previous investment failures, which have left her feeling anxious about potential losses.

Moreover, Laura’s family has a history of risk aversion, particularly stemming from experiences during economic downturns. As you prepare for your next meeting with her, consider the behavioral biases that may influence her investment decisions and outline a tailored investment strategy that not only addresses her financial goals but also alleviates her behavioral concerns.

In your response, discuss the relevant behavioral biases, suggest strategies to mitigate these biases, and provide specific investment recommendations that align with her goals while taking into account her risk tolerance.