The behavioral finance panel at the Datos Insights Wealth Management Forum in New York on October 16th brought together industry leaders to tackle one of wealth management’s most persistent challenges: helping clients overcome the psychological biases that undermine their long-term financial success. The discussion featured Rose Palazzo of Edward Jones, Michael Liersch of Edelman Financial Engines, and Adam Scully-Power of Nebo Wealth.
Three central themes emerged from the conversation. First, the industry must evolve beyond account-centric, benchmark-focused approaches toward deeper client understanding. Achieving this depth means capturing and institutionalizing knowledge on clients’ evolving preferences, emotional relationships with money, and generational wealth transfer needs. Second, goals-based planning should serve as the strategic framework for overcoming behavioral biases, as it helps clients maintain discipline and long-term perspective during market volatility. Third, technology and systematic behavioral interventions must support the advisor-client relationship in the form of AI and decision support tools that help advisors prioritize outreach and deliver timely behavioral nudges.
Addressing Recency Bias in Market Downturns
The panel opened with a stark reminder: Dduring the 2008 financial crisis, many investors panicked and sold stocks after markets had fallen 30%. Edelman Financial’s Liersch emphasized that the most effective client-management strategy combines proactive communication with precommitment mechanisms. Advisors need to have conversations about market volatility before downturns occur. That way, clients can set out their plan for handling turbulence without the pressure of watching their portfolio decline.
Supporting Advisors and Managing Client Psychology
Palazzo highlighted ways firms can better equip advisors to prevent clients from acting on biases. Specialized training must extend beyond technical knowledge to include behavioral coaching and empathetic communication. Firms need tools that alert advisors when clients risk emotional decisions—systems that flag unusual account activity or trigger outreach during market stress. Role-playing exercises and peer learning help advisors practice difficult conversations before facing anxious clients.
The discussion then turned to clients whose emotional relationship with money derails their financial plans. Traditional planning tools often fail to address underlying psychological issues. Effective strategies include uncovering the client’s money story—how childhood experiences and family dynamics shaped their financial behaviors—and creating safe spaces for conversations about financial anxiety, shame, or fear. Technology can facilitate this through guided reflection tools and regular check-ins that normalize difficult discussions. Financial planning must address not just numbers but also the emotions and narratives that drive life decisions.
Goals-Based Planning: Framework and Implementation
Scully-Power explained how goals-based planning helps clients address cognitive and emotional biases that damage portfolio performance. When clients focus on funding specific objectives like their daughter’s education or ensuring comfortable retirement, they become less prone to obsessing over quarterly benchmark comparisons. This approach reframes risk from an abstract statistical concept to something tangible—the probability of achieving what matters most to them. By organizing portfolios around specific objectives with different time horizons, goals-based planning reduces the temptation to jettison long-term strategies during short-term volatility.
For firms considering this transition, the panelists offered practical guidance. Success requires investment in comprehensive training programs that help advisors conduct effective discovery conversations and translate client aspirations into quantifiable goals. Technology platforms must support goals-based tracking and reporting, moving beyond traditional account statements to demonstrate progress toward specific objectives. Implementation also demands careful change management—helping advisors understand that this approach enhances rather than replaces their value proposition. The transition involves both technological infrastructure and cultural shifts in how advisors conceptualize their relationships with clients.
Delivering Holistic Advice at Scale
Palazzo and Scully-Power addressed the dual challenges of scaling personalized advice and moving beyond account-centric models. They described segmentation strategies that identify which clients need intensive, customized attention vs. those who can benefit from systematized guidance. Technology enables advisors to translate broad market conditions into goal-specific implications—automatically updating probability scenarios and triggering conversations when circumstances change. The essential balance is maintaining personal relationships while leveraging automation for routine monitoring and communication.
The discussion acknowledged the industry’s persistent account-centric orientation, which often conflicts with holistic wealth management aspirations. Panelists recognized that regulatory requirements and performance benchmarking create genuine constraints but argued that firms can work within these parameters by adopting household-level reporting and implementing unified managed household platforms. Training advisors to lead with comprehensive financial planning rather than product allocation represents a critical shift. The regulatory framework doesn’t prevent firms from taking a holistic view—it simply requires them to also report at the account level for compliance purposes.
The Promise of AI and Behavioral Nudges
Liersch concluded by exploring AI’s role in delivering behavioral interventions. The technology shows considerable promise for helping advisors prioritize which clients to contact and when, based on behavioral risk signals. For clients, AI-powered nudges can reinforce positive behaviors and discourage harmful ones. However, success requires careful attention to data privacy, transparent communication about how these systems work, and ensuring that interventions feel helpful rather than intrusive. The objective isn’t manipulation but is instead about supporting better decision-making at critical moments.
The panel left attendees with a clear message: The future of wealth management depends on embracing behavioral finance not as theoretical curiosity but rather as a practical framework for serving clients better.
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