FFC Behavioral Finance and Coaching Techniques 2

Question 1

A client consistently sells winning investments too early while holding losing ones too long. This behavior is best explained by which bias?

Accepted Answer

Disposition effect

Answer

The disposition effect describes the tendency to sell winners prematurely and hold losers too long due to loss aversion.

Question 2

When coaching a client who attributes all past investment successes to their own skill but blames bad luck for losses, a coach should address which cognitive error?

Accepted Answer

Self-attribution bias

Answer

Self-attribution bias causes people to credit themselves for successes and external factors for failures, distorting accurate self-assessment.

Question 3

Which motivational interviewing technique involves reflecting back what a client said using slightly different words to deepen understanding?

Accepted Answer

Reflective listening

Answer

Reflective listening involves paraphrasing or restating a client's words to demonstrate understanding and encourage deeper exploration.

Question 4

A client refuses to move emergency funds out of a low-yield savings account despite better options because 'that's always where we've kept it.' This illustrates:

Accepted Answer

Status quo bias

Answer

Status quo bias is the preference for the current state of affairs, making people resistant to change even when alternatives are objectively better.

Question 5

In behavioral coaching, what does the term 'change talk' refer to?

Accepted Answer

Client statements that favor movement toward change

Answer

Change talk refers to client statements expressing desire, ability, reasons, or commitment to change, which motivational interviewing seeks to elicit.

(FFC) Financial Fitness Coach Certification Practice Test

(FFC) Financial Fitness Coach Certification Practice Test

FFC Behavioral Finance and Coaching Techniques 2