Training the Investor Brain: Managing Emotions and Building Your Business

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“Is there anything I can do to be more transparent or communicate better?”

That’s one of several questions Dr. Frank Murtha has suggested financial advisors ask to strengthen relationships with their clients. Murtha, a psychologist and co-founder of MarketPsych, and Bob Schmidt, manager of the Brandes Institute, discussed behavioral finance during an Advisor Perspectives webinar called “Training the Investor Brain.” The duo shared more than a dozen specific questions, anecdotes, tools and tactics advisors can use today to help better manage client emotions – and in turn their clients’ money.

“The financial advisor profession is under attack today,” Murtha said. “And the attacks are coming from regulation, robo-advisors and the increasingly popular notion that people can invest successfully on their own.” While some individual investors have shown proficiency with money management, Murtha said many struggle. “And they struggle primarily because of behavioral biases. It’s very, very difficult to stay rational and disciplined over a long-term horizon. And generally people need these traits to do well.”

Murtha has worked with financial advisors and individual investors for 18 years, taking theories about behavior and providing guidance to put the theories into practice. Schmidt has managed the “thought leadership” division of investment management firm Brandes Investment Partners since the Institute’s inception in 2002.