Addressing Overconfidence in Private Wealth Management

In private wealth management, advisors must be aware of how clients' behavioral biases can impact their investment decisions. One common bias is overconfidence, where clients believe they can outperform the market based on their knowledge or past experiences. This can lead to an increased risk tolerance and imprudent investment choices.

Consider a scenario where a wealth manager is advising a client who has a strong belief in their ability to pick stocks based on personal research. The client wants to allocate a large portion of their portfolio to a few high-risk stocks, convinced that they will outperform the market.

What should the wealth manager primarily consider when addressing this client's overconfidence?