One key assumption of investment theory is this: “Investors have equal knowledge and make decisions based on logic and economic efficiency, rather than emotion.” This view has been challenged by “behavioral finance” but has not been quantified to help in controlling the emotional component of investing. We propose a holistic asset allocation process with performance analytics that may be the first “emotion-inclusive” solution. This bridges the “knowledge gap” and provides diversification and economic efficiency, while acknowledging each client’s unique
willingness to maintain an investment strategy throughout the swings of market cycles. We also evaluate the suitability of a client’s expectations to determine if a strategy is a good match and likely to be sustained. This also opens a unique opportunity for the performance evaluation function