NUDGING TOWARDS BETTER INVESTMENT DECISIONS: APPLYING BEHAVIORAL INSIGHTS IN WEALTH MANAGEMENT PLATFORMS

As personal finances are constantly changing their form, the platforms for wealth management have emerged as greatinstruments that give their users more and more space to manage their investments independently. However, due tocognitive biases, investor decision-making is often hindered, for instance, overconfidence, loss aversion and presentbias which lead to suboptimal results. This article examines how behavioural economics -the use of “nudges”- can betactically employed to design digital wealth management platforms that will encourage better investment behaviour.Based on the pioneering work of Thaler and Sunstein, nudging is a nudge to choice architecture that subtly changesthat point individuals towards the right choices without reducing their freedom of choice. Within the phenomenon ofwealth management, such nudges can be default portfolio allocations, warning signs about volatility in the market,personalised goal-setting modules, and framing techniques that reorient the perception of risk and return.The article synthesises recent literature on behavioural finance and digital interface design to submit a structuredframework to insert nudges in investment platforms. It also appraises the practical deployments from robo-advisorsand fintech startups and assesses their efficacy in enriching user outcomes. Emphasis is given to ethical considerationsincluding transparency, and autonomy, where a nudge improves investor welfare without manipulation.Overall, the paper concludes that synthesising behavioural insights to platform architecture is a promising horizon inthe democratisation of financial advisory work and the enhancement of long-term financial investor results. Withexpanding numbers of digital wealth tools, the ability to recognize the psychology of decision-making and use it toyour advantage is no longer an advantage but a necessity.