Over the past 40 years the discipline of Behavioral Economics has revealed hundreds of important insights into the way human beings make decisions. 50 years ago economists assumed that human beings were fundamentally rational when it came to financial decisions; today we know that there are hundreds of built-in mental mechanisms that can interrupt a client’s rational decision-making skills. In this fast paced conversation, Scott and Ken explore how the two “systems” or styles of thinking that researchers have discovered reveal themselves in client behaviors. Starting with the basic theory from Daniel Kahneman’s book, “Thinking, Fast and Slow” they look at several practical examples of “Fast Thinking” that advisor’s are likely to see in their clients and explore ways that advisors can move clients back to a slower, more broad-framed decision-making process that uses more information to arrive at better quality conclusions.
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