Nucleus white paper

    Discover the untold
    stories influencing your clients' decisions

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    The role of behaviour in financial planning

    The world is an increasingly uncertain and complex place, as we have all seen first-hand over recent months. What’s more, this period we’re living through provides ample opportunity to gain a deeper level of insight into what is shaping clients’ financial behaviour.

    Advisers and planners are well-versed in making the complex simple, and bringing money to life through lifestyle financial planning and the use of coaching.

    The next piece in the puzzle may well be behavioural insights; understanding our own biases and those of clients to make sure that advice really sticks, whatever noise is going on around us.

    Our latest white paper, written in partnership with Neil Bage and Dr. Ariel Cecchi of behavioural insights firm Be-IQ, takes the principles of behavioural science and shows how they can be applied to the financial planning process.

    In turn, understanding client behaviour in this way should promote deeper levels of client engagement, taking the ‘know your client’ requirements to a whole new level and allowing for a financial planning service tailored not just to clients’ needs but their attitude to risk, biases and behaviours.

    Behavioural insights – key terms


    Mental shortcuts or rules of thumb that allow people to simplify decision making.

    Examples of heuristics

    The availability heuristic, where you have to get past the first thing that comes to mind.

    The representativeness heuristic, where a person or thing is grouped into a certain category such as safe or dangerous, based on what we think is typical.

    Loss aversion

    Feeling losses more strongly than an equivalent gain.

    Example of loss aversion

    Where a client saving for retirement takes less risk than they need to over fear of potential investment losses, leading to an overly cautious approach over time.


    The filters we apply in judgement. Biases can be cognitive (how we process information) or affective (influenced by feelings and emotions).

    Examples of bias

    Confirmation bias – Looking for information that backs up your own view.

    Negativity bias – A tendency to focus on vivid or negative messages, especially those that seem more frequent.

    Present bias – The preference for immediate gratification compared to a bigger, but future-based reward.


    Showing an investment return example of five per cent will make it the psychological reference point.

    Examples of anchoring

    If high-risk funds are presented first, this will be the preference when offered a wider fund choice.

    Where behaviour fits into the advice process

    1. Initial advice

    Understanding the client’s risk preferences, the risk they are comfortable with taking and the risk they need to take.

    What are the client’s personality traits?

    What are the interventions needed to help keep clients on track?

    2. Planning

    Think about how clients process information.

    Is information being presented in a positive, negative or neutral way?

    How do you take what you know about the client to trigger action?

    3. Managing the plan

    What can you do to soften clients’ biases and improve their strengths?

    Think about frequency of updates, and whether these are suited to clients’ needs.

    How can you coach clients to build their financial wellbeing?

    Behavioural insights on illuminate online

    The power of adviser empathy

    By Neil Bage

    Over the course of the past four weeks, I've carried out almost a dozen video calls with clients of financial planners…

    We need to talk about behaviour

    By Chris Budd

    Behavioural finance is the study of how the behaviours and cognitive biases that are within us all lead to poor financial decision-making…

    Financial wellbeing for planners and clients

    By Hayley Tink

    Financial wellbeing for me is where the behavioural meets financial planning

    The most overlooked skill when it comes to investing

    By Morgan Housel

    Investing is not just the study of finance. It’s the study of how people behave with money…