unit 1

Question 1

what is behaviour science

Answer 1

it is a sub field of beh. economics that uses insights from the fields of psychology and neuroscience to understand how people make investment decisions

Question 2

conventional vs behavioural science

Answer 2

conventional- assume people make rational choices and are always informed and trying to max profit
behavioural- assume people are irrational and susceptible to irrelevant emotions and short sightedness

Question 3

cognitive systems

Answer 3

limbic or automatic system (gut reactions)

prefrontal cortex or reflective system (long term planning)

Question 4

heuristics and biases

Answer 4

heuristics- mental shortcuts

biases- due to heuristics, biases such as cognitive and emotional biases are produced

Question 5

types of heuristics

Answer 5

availabiity, anchoring, representativeness, affect

Question 6

cognitive and emotional biases

Answer 6

cognitive- systematic error

emtional- due to attitudes and emotional factors

Question 7

forms of cognitive biases

Answer 7

belief-natural or error due to information processing

belief-laden or error due to existing belief

Question 8

types of cognitive biases

Answer 8

anchoring and adjestment
Availability
bandwagon or herding effect
confirmation
conservatism
mental accounting
representativeness
self-attribution

Question 9

types of emotional biases

Answer 9

affinity
disposition
Endowment 
loss aversion
overconfidence
status quo

Question 10

kyc?

Answer 10

know your client, process & reqm of assessing the degree of financial risk is tolerable to the client

Question 11

client engagement skills

Answer 11

connecting and communicating with your clients at a human level

Question 12

different types of personality

Answer 12

mover, thinker, connector and planner

Question 13

what is communication

Answer 13

giving and taking of info, ideas, concepts and messages. without a receiver a communication has not occurred

Question 14

stages of engagement skills

Answer 14

first- identify personality style

second- developing communication skills: attending, soliciting, reacting, and structuring skills

Question 15

tools to assist the panning process of retirement (five effective tools)

Answer 15

1- my vision for the future (activities, relationships, lifestyle, location)
2- self-portrait (values, beliefs, interests)
3- building horizons (outcomes vs time frames)
4- force field analysis (goal drivers and restrainers)
5- circle of support (inner support circle, other support poeple)

Question 16

Conversations and personality cues

Answer 16

values, psychological strength, physical vitality, medical philosophy, geographical location, social engagement, leaving a legacy, giving back, learning and brain engagement, retirement life dream team, aging in place or a place for aging

Question 17

retirement first developed by

Answer 17

chancellor otto von bismark in 1880s germany

Question 18

phases of retirement

Answer 18

~beginning the planning process
~implementing the plan and building the retirement fund
~monitoring progress
~approaching retirement
~retirement and distribution of assets

Question 19

six step retirement planning process

Answer 19

• establish client-planner engagement
• establish objectives and gather data
• clarify present status and identify problems and opportunities
• identify appropriate strategies and present plan
• implement the plan
• monitor and update

Question 20

specific retirement decisons

Answer 20

• early retirement offers
• retiring prior to normal retirement age
• life annuity vs registered income fund
• pension benefits upon termination of employment
• life annuity vs GICs