Document Type
Article
Publication Date
12-1-2011
Abstract
The static portfolio construction process is an efficient and rational choice to allocate clients' assets in well behaved markets. However, if markets become disruptive, like in 2008, relying on historic risk/return relationships becomes challenging and active financial advisor intervention necessary. The literature is silent about how financial advisors learn from such dislocations and how it affects their asset allocation process. Semi-structured interviews with 30 US financial advisors yielded insights into what shaped their decision making process. We identified five factors that appear to have had the strongest effect on their behavior, namely their enduring belief in recurring historic patterns, continued reliance on model assumptions, active time horizon management, their cognitive capacity and perceived locus of control.
Keywords
mitigation, disruptive event, adaptation, individual learning, organizational learning, behavioral change
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Hensler, Philipp A., "The Affect of Organizational and Individual Learning From Disruptive Market Events on Financial Advisor Behavior" (2011). Student Scholarship. 431.
https://commons.case.edu/studentworks/431