Behavioral Factors in Wealth Management Strategy

As a private wealth manager, you are meeting with a long-term client, Sarah, who is a successful entrepreneur nearing retirement. During your discussions, Sarah expresses a strong desire to ensure her family's financial security while also wanting to engage in philanthropic activities that reflect her values. However, she exhibits several behavioral biases, including overconfidence in her ability to evaluate investments and a tendency to avoid discussing potential financial losses.

Analyze how these behavioral factors could impact Sarah's wealth management strategy. In your response, discuss the implications of overconfidence and loss aversion on her investment decisions and the steps you would recommend to align her portfolio with her goals while addressing her behavioral biases. Provide relevant examples and frameworks that could assist in managing these behaviors effectively.