Core Curriculum Chapter 16

Question 1

SYSTEM 1 VS SYSTEM 2 THINKING - How do they impact financial decisions?

Answer 1

System 1 is fast and emotional, while System 2 is slow and analytical.

Question 2

MONEY SCRIPTS - What are money scripts?

Answer 2

Deep-seated beliefs about money formed through life experiences, influencing financial decisions.

Question 3

COGNITIVE LOAD - How does stress affect financial decision-making?

Answer 3

High cognitive load reduces rational thinking, leading to poor financial choices.

Question 4

LOSS AVERSION - How does it affect financial planning?

Answer 4

People fear losing money more than they value gains, leading to overly conservative investing.

Question 5

CHOICE OVERLOAD - How can too many financial choices impact decision-making?

Answer 5

It can cause paralysis by analysis, leading to indecision or inaction.

Question 6

CLIENT COMMUNICATION - What are key strategies for effective financial planning discussions?

Answer 6

Framing advice properly, simplifying complex concepts, and addressing behavioral biases.