Ryan Paterson: Using behavioural finance to take control of investments

Mitigating cognitive and emotional biases

clock • 4 min read

Behavioural finance offers the prospect of a better understanding of financial markets as well as scope for advisers and their clients to make better investment decisions, explains Ryan Paterson

"The investor's chief problem - and even his worst enemy - is likely to be himself." Benjamin Graham Traditional finance is based on rational and logical theories, such as the capital asset pricing model (a model that describes the relationship between market risk and expected return for assets) and the efficient market hypothesis (a theory in financial economics that states an asset's price fully reflects all available information). These theories assume investors are rational, which means they make decisions that maximise utility and revise their expectations in a manner consiste...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

Consultancy launches to provide IFAs with 'robust' investment processes

Consultancy launches to provide IFAs with 'robust' investment processes

Sheridan Admans launches Infundly

Isabel Baxter
clock 06 November 2025 • 1 min read
Inflation protection not front of mind for financial advisers

Inflation protection not front of mind for financial advisers

Titan Square Mile report suggests

Jen Frost
clock 04 November 2025 • 3 min read
Trick or treat? The UK and global economy face their Halloween ghosts

Trick or treat? The UK and global economy face their Halloween ghosts

‘Wealth managers and market professionals are tiptoeing past economic graveyards’

Stephen Jones
clock 31 October 2025 • 4 min read