Evidence from the behavioural sciences, notably economics and psychology, has profoundly changed the way policymakers and practitioners view expert advice to consumers. In this article, we take stock of the behavioural science evidence on financial advice and explore its implications for the profession. We organise the evidence in a comprehensive theoretical framework that also serves a practical purpose: the design of behaviour change interventions. We suggest various ways in which financial advisers can use the insights from behavioural science to improve the take-up and effectiveness of their advice. Finally, we discuss ethical and practical considerations for the financial advisor wishing to put behavioural science knowledge to use.
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We thank Aviva Ltd UK for their financial support and comments on earlier versions of this article.
1joined Warwick Business School as a Professor of Behavioural Science in 2014. He received his DPhil in Experimental Psychology from St. John's College, Oxford, before working at the University of Warwick, University College London and Imperial College London. He studies decision making from the perspectives of psychology, neuroscience and economics. In 2010, he co-authored the Mindspace report published by the UK Cabinet Office, advising local and national policymakers on how to effectively use behavioural insights in their policy setting.
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Vlaev, I., Nieboer, J., Martin, S. et al. How behavioural science can improve financial advice services. J Financ Serv Mark 20, 74–88 (2015). https://doi.org/10.1057/fsm.2015.1
- financial advice
- behavioural economics
- decision making
- behaviour change