Analytical Study of Importance of Behavioral Finance

 Purpose of research: The paper helps to understand the concept of 'Behavioral Finance' and how it helps to deepen ones client relationships. It has been long observed that investors are not rational in their investment approach at all times. At times they may be influenced by emotional & psychological biases that are embedded in the human psyche, and it can negatively impact their returns in the long term. Behavior Finance, which combines the fields of economics & psychology, may help financial planners to understand investor behavior in a deeper manner, get around the baises & enhance the real returns for them.

Methodology: Paper draws information and supports material for the research using secondary sources such as Journal, Internet, and Newspapers etc.

Expected results: Behavioral Finance helps financial planners understand client behavior and improve communication strategies in order to avoid poor decision making & deepen the client relationships.

Implication: Behavioral Finance should therefore not be viewed as a rejection of investment models but it picks up where traditional financial model leaves off.

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