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Behavioural Finance for Private Banking Hardcover – Mar 23 2009

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From the Inside Flap

"Behavioural Finance for Private Banking is true to itstitle. The book contains a wealth of practical advice to helpprivate bankers make effective use of behavioural finance. Afterproviding a rigorous introduction to key psychological concepts,the book offers a series of concrete steps private bankers canfollow to help their clients make sensible investmentdecisions--decisions which reflect clients’ individualpsychological traits. The impact of this book on private bankingwill be significant and long-lasting."
Hersh Shefrin, author of Beyond Greed and Fear andA Behavioral Approach to Asset Pricing

From the Back Cover

Behavioural Finance for Private Banking provides advisors ofprivate clients with both the appropriate framework for their taskas well as a collection of practical tools to support their work.

The book begins with a brief introduction to the currentchallenges of the private banking industry before identifying thefoundations of behavioural finance - decision theory. The bookaddresses the many psychological traps (behavioural biases) thatare commonly observed along a typical decision-making process andin particular, how these biases differ across different cultures,something which is of vital importance for any bank offeringprivate banking services worldwide. The authors then show how tointegrate these insights into a tool of highly practical relevance- a risk profiler. The book also covers structured products - andhow to evaluate them both from an expected utility theoryperspective and from a prospect theory point of view. Moreover, theauthors explain how to design structured, tailor-made products forprivate clients. The dynamics of investing are then explored bydemonstrating which investor will rebalance their portfolio duringthe course of investments and which one will take their profits orincrease risks providing a foundation for common investment advicelike the age rule. The book concludes with wealth managementshowing how a typical advisory process should be structured to makethe best use of the services the bank can offer, integratingpersonal asset-liability management, life cycle aspects, a riskprofiler, a strategy implementation, and a well-suiteddocumentation.

In particular, readers will learn:

  • How to assess the client’s risk profile;
  • How to find an optimal asset allocation according to client'srisk profile;
  • Which investment products are optimal from client'sperspective;
  • When it is wise to rebalance the portfolio during the course ofinvestments, and when it is better to take the profits or toincrease the risks;
  • The foundation of some commonly used rules of thumb and whenare they wrong;
  • How to adjust the asset allocation over the life cycle

A balance is made throughout the book between writtenexplanations, examples, and case studies, with the use of somemathematics to deepen understanding. With a unique focus on clientadvisory as opposed to asset pricing, Behavioural Finance forPrivate Banking provides valuable insights and will enablepractitioners to improve service quality at every step along thewealth management process.

Inside This Book (Learn More)
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Front Cover | Copyright | Table of Contents | Excerpt | Index
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2 of 2 people found the following review helpful
Excellent Guide Dec 8 2009
By Private Banker - Published on
Format: Hardcover
Great book. It combines insights from decision theory, portfolio theory and behavioural finance to derive scientifically-founded solutions. The book combines explanations, practical examples and case studies. "Math boxes" are used to set out the mathematical foundations of selected theories and examples. The book is very readable and therefore recommended for practioners (the main arguments of the book can easily be followed without advanced mathematical skills).