A New Certification to Help Advisors Master Behavioral Finance

The appeal of the College of Financial Planning’s Accredited Behavioral Finance Professional program.

(Illustration by RIA Intel)

(Illustration by RIA Intel)

The College for Financial Planning, the Kaplan-owned education and licensing company that created the Certified Financial Planner designation and others, announced a new one on Monday intended to improve wealth managers’ “emotional competencies” and, ultimately, the advice they give.

The college’s Accredited Behavioral Finance Professional (ABFP) program is the first behavioral finance designation built specifically for financial advisors from an accredited college or university, according to the institution.

Behavioral finance, the study of psychology and investor behavior, focuses on investment decisions based more on emotion and biases than facts. The perils of doing so are self-evident to wealth managers, but the new designation will help advisors better identify irrational behavior, educate their clients about it, and coach them to avoid it. For example, an advisor might already be protecting their clients from untimely buying and selling of securities. But a better understanding of behavioral finance could also help advisors inform clients and ease their anxieties about the market.

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The deluge of digital client data in recent years can function like an advisors’ crystal ball, but behavioral finance can teach other lessons, like the two words no advisor should ever utter to a client.

“The College brings together comprehensive research and trends from leaders and experts in the area of behavioral finance and hands-on classroom activities that enable advisors to translate theory into practice and start using new skills with clients from day one,” the college said in a statement about the new designation.

Demand for more education on behavioral finance was strong enough to support the new designation, according to the college. Among advisors already using behavioral finance-driven approaches to client relationships, 79% said it resulted in better client relationships, 75% said it led to better client reception of their planning advice, and 22% attracted more clients, according to a survey of 507 financial professionals by the college.

Seventy percent of the survey participants who have not received behavioral finance training are now considering it, and 78% of all participants are interested in training that resulted in accreditation.

“Our survey results support what we’ve been hearing from many professionals — that there’s an appetite for advisor-focused behavioral finance training,” Dirk Pantone, President of the College for Financial Planning, said in the statement.

To add ABFP after their name, advisors must complete an eight-week online course. The course includes live and on demand classes, an online textbook and articles, videos, quizzes, practice exams, and the final exam. Within behavioral finance, the course covers psychological perspectives on economics, the role of psychological biases, heuristics, and emotions in financial decision making, and applying knowledge of investor psychology to financial advice.

The new designation is one of 10 “stackable” credentials offered by the College for Financial Planning. In addition, it offers a master’s degree in Personal Financial Planning and the CFP certification, the most popular and recognized credential with more than 87,000 holders.

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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