Musicians Taylor Swift and Ed Sheeran famously sang “I just want to get to know you better” in their song ‘Everything has changed’ but how much, as advisers, are we doing to know our clients better?

Life is complex and constantly changing. Every day someone is getting married, divorced, buying a house, having a baby, and burying a loved one.

Advisers are across those big moments.

They’re also across the finer details like an accident or injury, promotion or home renovation. These types of events are easy to identify and label with clear financial implications.

Where things get lost is around shifting beliefs, desires and priorities.

In this grey area, many advisers are guilty of making assumptions, based on outdated or incomplete information.

The growing acceptance of behavioural finance is a positive development because it gives advisers greater insight into the minds and psychology of investors.

Advisers are increasingly knowledgeable of behavioural finance concepts like anchoring and framing, confirmation bias and prospect theory, and the heuristic approach to problem-solving, which relies on mental short-cuts to produce solutions quickly.

The study of behavioural finance has identified over a hundred biases and heuristics.

Technology is also helping advisers record and monitor biases and changes in client attitudes and behaviours.

But there’s a danger that the mainstreaming of behavioural finance and overreliance on digital tools could lead to more assumptions.

Advisers, like other practitioners be they doctors, lawyers or accountants, are prone to reading client information or sitting back in meetings and ticking off biases and symptoms as they present. It’s akin to behavioural finance bingo.

As a result, there is a risk of making the same mistakes seen in traditional economics, where people assume they know the solution to a problem, based on a snippet of information.

In traditional economics, there is a strategy or approach to thinking about problems, however, the overuse of mathematical modelling has created a sense that there is a definitive answer.