Using available documentary resources, you are required to write a Essay

Using available documentary resources, you are required to write a proposal for a research topic of your choice - Essay Example Many theories have been propounded by experts in the field of investment to help making investment decisions rationally. These rational investment decision theories stem from standard finance/ neoclassical economics. However, investment decisions by individuals are influenced not only by rational theories but irrational/behavioral theories as well. This acknowledgement develops a new branch of knowledge-behavioral finance- which deals with how investment decisions are taken in line with behavioral aspects of individuals. Behavioral finance has become one of the disciplines of great interest to investment firms and wealth management professionals. It is commonly understood as the application of psychological aspects of investors to financial planning and decision making. With the growth and development of UK economy, the need for planned investment among common investors has become a necessity and as a result the demand for wealth management has become phenomenal. Wealth management is the process of channelizing the funds of clients by professional wealth managers in conformity to the formers’ financial requirements and choice. The insights of personal financial planning and theories of rational finance are extensively used to make planned personal investment decisions. The rational finance which stems from neoclassical economics postulates that the economic decisions of investors are determined by the principles of perfect self-interest, perfect rationality, and perfect information. This is not going to be a logical view point as described by behavioral finance. Behavioral finance states that people are neither perfectly rational nor perfectly irrational: they possess diverse combinations of rational and irrational characteristics that govern their decisions on investment. This behaviour has been experienced and documented from the practical experience of wealth management professionals and investors. Thus,