FPC007 Client Engagement Skills

This subject explores the concepts of Behavioural Finance to understand why the decision heuristics (e.g. rules-of-thumb) and occasionally cause people to make mistakes in financial decision-making.  People know better but get blindsided by biases.  Hence, the discussion leverages theories of finance and economics to explain: how a logical and rational decision-maker occasionally succumbs to his or her irrationality; and how collective irrational exuberance can explain the economic ‘anomalies’ experienced periodically in financial markets.


This subject departs from the rational and analytical discussions often taught in other finance and economics subjects.  Instead, this subject discusses the emotions and emotional reactions that are part of a client’s decision to accept or reject financial advice.  As well, discussion raises awareness of how a financial planner may inadvertently exacerbate their clients’ decision biases.

For more information, please refer to the subject outline.

  • Learning outcomes
    • The following learning outcomes apply to Study Period 2 2016 onwards. If you are in a previous study period, please refer to your subject room.

      At the completion of this subject students should be able to:

      1. Critically evaluate the explanations of market and investor behaviour according to Portfolio and Prospect theories
      2. Extend the insights of behavioural finance to understand the nature of client relationships in the context of financial planning
      3. Compare and contrast the effects of emotionally intelligent behaviours and critical thinking behaviours on the outcomes of client engagements in a financial services company or licensee
      4. Critically examine the authenticity of communications from a financial adviser to a client with feedback from an assessment of communication styles
      5. Evaluate a range of heuristics, biases and decision errors made by financial advisers and clients in a context of financial services
      6. Build a professional development plan based on results and feedback from various sources
  • Subject outline
    • The following subject outline applies to Study Period 2 2016 onwards. If you are in a previous study period, please refer to your subject room.

      Topic Title
      Topic 1 Introduction to Behavioural Finance
      Topic 2 Emotional intelligence
      Topic 3 Authentic communication
      Topic 4 Consumer Behaviour

  • Assessment
  • Pre-requisites
  • Reading list
    • Prescribed text

      Pompian, M 2012, Behavioral Finance and Investor Types: Managing Behavior to Make Better Investment Decisions, John Wiley & Sons, Hoboken, NJ

      The Pompian text is also available on the EBSCOHost e-book database, however, this is restricted to an e-book format which can only be viewed electronically. It cannot be downloaded or printed.

      Retailers of educational books include Co-op Bookshop and Boffins Bookshop. Texts can also be borrowed from the Kaplan library or other libraries. Details of required and further reading are provided in the subject room.  Purchase of any text other than a prescribed text is not required.