Client behavior, communication, fiduciary duty, Code of Ethics and the financial planning process.
41 cards · basic cards · AI-written, checked twice. Edit anything.
- What is fiduciary duty in financial planning?
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The legal and ethical obligation to act in a client's best interest, placing the client's interests ahead of the planner's own.- What does the duty of care require?
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The planner must possess the knowledge and skill necessary to provide competent advice and act with reasonable diligence.- What does the duty of loyalty require?
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The planner must prioritize the client's interests over personal gain and disclose any conflicts of interest.- What is loss aversion?
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A behavioral bias where people fear losses more than they value equivalent gains, leading to risk-averse decisions.- What is anchoring bias?
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The tendency to rely too heavily on an initial piece of information when making decisions.- What is herding behavior in investing?
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When investors follow the crowd and make decisions based on what others are doing rather than independent analysis.- What is confirmation bias?
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The tendency to seek, interpret, and remember information that confirms existing beliefs while ignoring contradictory evidence.- What is overconfidence bias?
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The tendency to overestimate one's abilities, knowledge, or the accuracy of one's predictions.- What is the framing effect?
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People react differently to choices depending on how the options are presented or framed, even when the outcomes are equivalent.- What is availability bias?
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The tendency to overestimate the probability of events that are easily recalled or mentally available.- What is mental accounting?
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The way people categorize, evaluate, and treat financial activities by segregating money into separate mental accounts.- What is regret aversion?
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The desire to avoid decisions that might result in regret, sometimes leading to inaction or maintaining status quo.- What is prospect theory?
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A theory describing how people evaluate decisions involving risk, often showing loss aversion and valuing gains and losses differently.- What is status quo bias?
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The tendency to prefer things to remain unchanged and to resist making decisions that alter the current state.- What is the sunk cost fallacy?
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The tendency to continue investing in something because of previously invested resources, despite poor expected returns.
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