Behavioral Factors in Wealth Management: Strategies for Client Biases

As a private wealth manager, you are working with a high-net-worth individual (HNWI) who has recently inherited a significant sum of money. While this client has a solid understanding of investments, they exhibit several behavioral biases that could impact their financial decision-making process.

These biases include, but are not limited to, overconfidence in their ability to time the market, loss aversion, and framing effects influenced by their recent inheritance.

Discuss how these behavioral factors affect the client's investment strategy, provide at least two specific strategies you would employ to mitigate the impact of these biases, and explain how your suggestions will align with the client's overall wealth management goals.