Banach Wealth Management June 24, 2009 Draft Guide Ch. 10 & 11
Section V. Personal Risk Reduction Processes
Chapter 10. Recognizing Personal Behavioral Biases
And Risk Tolerances
Key Points
- Risk tolerances vary with circumstances
- Align wealth goals with risk tolerance
- Measure biases: mainly at transaction time
- Improvement aides; checklists and habits
- Written transaction analysis; develop
process to correct poor personal biases
Chapter 11. Improving Rational Biases
Key Points
- Identify short cuts and impacts
- Distinguish rational from emotional adjustments
- Overcome biases with specific corrections
- Develop a rational portfolio management process
- Monitor results and respond per a plan