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CFA Level 3
Portfolio Management and Wealth Planning

Identifying Behavioral Bias in Investment Preference

Very Easy Behavioral Finance Applications In Wealth Management

James is a financial advisor helping a high-net-worth client to construct a personalized investment portfolio. The client is relatively risk-averse but has expressed a strong preference for investing in technology stocks due to their recent high performance. James recalls a concept from behavioral finance that pertains to how clients’ perceptions and emotions can influence their investment decisions. He wants to ensure that he effectively manages this client's biases to maintain a well-diversified portfolio.

Which behavioral finance bias is James particularly concerned with in this scenario?

Hint

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