Sorry to be the dissenting opinion, but someone has to say the emperor has no clothes. Being a money manager for individuals, I -like many others- are scrambling for the "new-new" thing in portfolio development. I picked up this book because I've been trying to tie in clients' behaviors with Modern Portfolio Theory and take it to the next step of creating investment portfolio allocations given set(s) of behavior and biases. The book is aptly titled, "Behavioral Finance...."- but shouldn't have "....Wealth Management" in the title, nor should it have the subtitle- "How to build optimal portfolios that account for investor biases". (I'm contacting the publisher about that one.) Michael Pompian does a fantastic job of telling us why people do the things they do and why they act the way they do with their investments, but no where- repeat- no where, does it talk about building portfolios that account for those behaviors. That's really up to the advisor. I really soaked up the behavioral characterizations and it really enlightened me to specific clients I have, but again- don't think that the (sub)title means anything- it doesn't. This should be required reading for all those in the field, but look elsewhere if you're trying to create/manage portfolios. Each chapter ends with "Practical Application"s, but they're not worth the paper it's printed on- they're just a regurgitation of A.) the chapter itself and B.) conventional wisdom in the form of- you're the advisor- go figure it out yourself by reading more studies (lots of other studies sited in the book!). I'm giving the book three stars because it does provide behavioral analysis- the other two stars would be if Michael delivered on the title "How to build optimal portfolios..."....he doesn't. (maybe Amazon forgot to send me the accompanying workbook?!?)

One of the most important books on the subject of behavioural finance. Covers the subject in a comprehensive manner and provides great insights for constructing investment portfolios which are rational and closer to investor behaviour. Provides an excellent tool for enhancing real life returns of investor.