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Advisors, as well as investors, can be influenced by behavioral biases that affect client outcomes, according to survey findings released Thursday by SEI.

A quarter of advisors acknowledged that the tendency to overestimate their skills and accuracy was the main behavior that affected their decision making, followed by a fifth of respondents who fessed up to acting to avoid regret.

“Advisors are human, too,” John Anderson, head of practice management solutions at Independent Advisor Solutions at SEI, said in a statement.

“Recognizing their own biases and taking proactive steps to keep them in check will foster trust and open dialogue with clients, which is essential to an advisor’s business success in any market environment.”

The surveys showed that biases are just one consideration in the advisor-client relationship. Besides differences in clients’ and advisors’ expected behaviors during bouts of market volatility, disconnects exist in the perceptions and discussions around risk.

SEI said risk profiling questions should be worded carefully to assess the client’s attitudes without introducing both advisor and investor biases. It noted that emotions often drive client perceptions of risk, and can be easily misunderstood or discounted by advisors who typically take a strictly rational approach.

The research was based on a survey of 608 advisors conducted in April, and of 653 U.S. households conducted by Phoenix Marketing International in March. The latter respondents had investable assets ranging from $100,000 to $249,999 on the low end to $1 million to $5 million on the high end.

Measuring risk can be complex and is not intuitive for most investors, highlighting a discrepancy between how advisors and clients view risk, SEI said.

“It’s important for advisors to understand risk along two dimensions: market risk and shortfall risk,” J. Womack, managing director of investment solutions at Independent Advisor Solutions, said in the statement.

“By shifting the client’s focus from benchmark performance to what it means if they cannot retire at 65 years old, the client and advisor can avoid knee-jerk reactions to short-term market movements, and instead focus on the end-game with full transparency.”

Implementing a goals-based wealth management framework can overcome these challenges, Womack said.

However, the research also showed that the term “goals-based” may be used too liberally.

Fifty-nine percent of advisors surveyed believed they were implementing a goals-based framework, and 86% said they aligned individual portfolios with individual goals.

Yet, 52% of advisors reported that they managed only one or two portfolios per client, whereas a true goals-based wealth management approach builds multiple portfolios, each aligning to an individual goal, according to SEI.

SEI said that in a true goals-based wealth management framework, traditional advisor-driven wealth management is replaced with co-planning and ongoing client-advisor engagement, supported by technology.

Placing the client at the center of the conversation with the advisor serving as coach is vital, it said, pointing to research that showed an average 150-basis-point positive effect on portfolio performance.

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