What is Neurofinance and Why Should You Care?

dan solinAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Dan's new book for millennials, Wealthier: A Field Guide to Financial Freedom, will be published in April 2024 and available on Amazon.

If you aren’t familiar with neurofinance, this article will be an eye-opener.

The more you understand how the brain processes financial information, the better you can serve your clients. Neurofinance provides that insight.

What is neurofinance?

Neurofinance is a branch of neuroeconomics – which scrutinizes the intricate connection between the human brain and financial decision-making. It seeks to understand how our brains unconsciously influence our behavior regarding financial choices.

Neurofinance investigates the neural activity in our brain during various stages of financial decision-making. It encompasses information collection, stimulus selection, classification, processing, and interpretation.

Each stage is influenced by genetic traits, personality, implicit memory of past experiences, and perceptions of risk and uncertainty related to financial information and market conditions.

Neurofinance research uses functional magnetic resonance imaging, electroencephalography, eye-tracking, and facial expression recognition to gain insights into how the brain processes financial information.