New solution to combat biased investor decisions

Behavioural Finance Australia (BFA) yesterday announced its new partnership with Bellmont Securities to deliver an investment solution comprising a portfolio of directly held shares, managed and structured in a way to overcome investor biases that could lead to worse financial outcomes for clients in the long term.

“Behavioural finance research demonstrates that investors are subject to a range of investment decision-making biases," BFA director Simon Russell said.

“[The] research measures investment decision-making in controlled laboratory settings, or in large-scale real world environments, and links the findings with relevant research from psychologists and neuroscientists about how the brain functions and how people make decisions,” Mr Russell said.

Under the new arrangement, BFA will help advisers and accountants to define the characteristics of the investment solution that best meets their clients' and business needs, the firm said in a statement.

“BFA has partnered with Bellmont because ... it is able to deliver its service via a number of different platforms or managed account providers. This allows the adviser/accountant to tailor the risk/return characteristics of the portfolio as well as the client experience,” Mr Russell said.

“What is different about the investment solution is that it applies behavioural finance insights in both investment management and client engagement, it targets an under-serviced part of the market by offering a non-traditional direct investment solution designed for more sophisticated, independently-minded SMSF investors, and it can be delivered in a flexible way to accommodate a range of different business models and client needs,” BFA said.