Behavioral Finance and Customer Education Classical financial theory assumes that people are rational, yet a person does not have to delve into that assumption to realize that this is not always the case. A study conducted by Brad M. Barber and Terrance Odean highlights this anomaly. They found that from 1991 to 1996 the market returned an annual return of 17.9% compared to the average household net return of 16.4%. Households that traded the most achieved an annual return of only 11.4%. This surprisingly debunks the theory that investors are rational. Investors act with emotion and overconfidence, not with rationality as has been assumed in past theory (Barber and Odean). Across the country, financial planners and wealth managers are wondering what behavioral finance looks like and what they can do with it. Most counselors have experienced the frustration of developing a good plan for their clients, only to see the client make excuses or end up ignoring the plan. This paper will highlight the history of behavioral finance, describe biases commonly used by financial planning clients, and provide suggestions for how financial advisors and wealth managers can work with clients with these biases and use positive versions of biases to help with customer education and training. understanding.A story Daniel Kahneman has made great strides in the field of behavioral economics and, by extension, behavioral finance. He emphasized that people are strongly influenced by emotions and their intuition. He introduced the idea of ​​a person having “two minds”: an intuitive mind and a reflective mind. The intuitive mind makes quick judgments and they are the things that simply come to mind. The reflective mind is the analytical and thinking part. Most decisions people make are made on paper… by all types of investors based on research conducted by Michael Pompian. Barrett Ayers, the company's CSO and CEO, says topics of interest include "risk tolerance, level of confidence, and tendency towards emotional or cognitive investing" (Skinner). This approach allows consultants to communicate more effectively with their clients based on client needs. Conclusion Investors are not by nature rational investors, as assumed in economic theory. Investors are subject to numerous behavioral and heuristic biases such as framing, representativeness and loss aversion. By accepting that your customers are behavioral and will react with emotions and behavioral biases, you will open yourself and your business to a new realm of possibilities. In the future, advisors should work with clients to identify behavioral biases and identify the best solutions for an investor.