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Personal Benchmark: Integrating Behavioral Finance and Investment Management

Book Description

In Personal Benchmark: Integrating Behavioral Finance and Investment Management, Chuck Widger and Dr. Daniel Crosby outline the ways in which a program of embedded behavioral finance, fueled by what matters most to you, can be your protection against irrational financial behavior. Along the way, you'll learn how to improve your investment experience, increase returns formerly sacrificed to misbehavior, and worry less about "The Economy" as you become increasingly focused on "My Economy."

Welcome to a new way of investing, a new paradigm for conceptualizing wealth, and a system of turning emotion from your portfolio's worst enemy into its best friend!

In this new model, risk is simply the likelihood that we will underperform our dreams. Irrationality is acting in ways that thwart our ability to reach those dreams. And the optimal portfolio is not the one that generates the highest return in abstraction, it is the one that helps us meet our goals without killing our nerves before we get there.

This book gives advisors the tools needed to effectively communicate the design and execution of the Personal Benchmark solution.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Preface
    1. A Strategy
    2. A Behavioral View of Finance
    3. Personal Benchmark: A Tool for Advisors
    4. Some Acknowledgments
    5. References
  6. Introduction
    1. References
  7. Part 1: Why Do We Need to Look at Investing Differently?
    1. Chapter 1: Freedom in the Market and Advisor Responsibility
      1. The Financial Markets
      2. What We've Been Up to as Advisors
      3. What Investors Really Want and Need
      4. A New Investment Advice Delivery System
      5. Brinker Capital and Personal Benchmark
      6. Summary
      7. References
    2. Chapter 2: Investor Emotions and Financial Decisions
      1. The Origins and Evolution of Behavioral Finance
      2. The Myths of Efficiency and Rationality
      3. A Definition and Framework for Behavioral Finance
      4. Summary
      5. References
    3. Chapter 3: Risk, This Time It's Personal
      1. Fallacy 1: Risk and Return Are Systematically Correlated
      2. Fallacy 2: Investors Have a Single, Static Level of Risk Tolerance
      3. Fallacy 3: One Man's Risk Is Another Man's Reasonable Probability
      4. Behavioral Risk and You
      5. Summary
      6. References
  8. Part 2: What Is the Personal Benchmark Approach?
    1. Chapter 4: Brinker Capital's Multi-Asset Class Investment Philosophy
      1. A Brief History of Investing
      2. Our Multi-Asset Class Investment Philosophy
      3. Applying Our Philosophy
      4. Implementing Our Philosophy
      5. Summary
      6. References
    2. Chapter 5: The Power of Buckets
      1. Intentional Framing
      2. Framing with Purpose
      3. Mental Accounting for Increased Rationality
      4. Goals-Based Mental Accounts: A Case Study
      5. Summary
      6. References
    3. Chapter 6: Selection of an Active Investment Manager
      1. Passive versus Active Management
      2. The Successful Investment Firm
      3. The Successful Investment Manager
      4. An Effective Investment Management Process
      5. Monitoring and Assessing Performance
      6. Summary
      7. References
  9. Part 3: How Can We Execute a Purpose-Driven Investment Strategy?
    1. Chapter 7: Using a Goals-Based Approach
      1. The Allure of Determinism in Economics and Psychology
      2. The Economy of One
      3. Our Inner Demons: A Field Guide
      4. Let Your “Why” Teach You “How”
      5. Summary
      6. References
    2. Chapter 8: Pursuing Your Personal Benchmark
      1. The Difference a Frame Makes
      2. Limitations in Our Decision Making
      3. The Joneses, Jealousy, and Missteps
      4. The Anatomy of Better Decisions
      5. Summary
      6. References
    3. Chapter 9: Providing an Easy-to-Understand Explanation
      1. Your Best Investment
      2. Once More, with Feeling
      3. Changing the Conversation
      4. The Brinker Capital Personal Benchmark Solution
      5. Summary
      6. References
    4. Chapter 10: Leveraging a Scalable Offering for Investors and Advisors
      1. Using Personal Benchmark
      2. Reaping Benefits for Advisors
      3. Summary
  10. Conclusion
  11. About the Authors
  12. About the Companion Website
  13. Index
  14. End User License Agreement