Beyond Rationality: Investor Behaviour, Financial Advice and the Evolution of Financial Intermediation

The increasing complexity of financial markets has made investment decision-making a challenging process for individual investors. Traditional financial theories, based on the assumption of fully rational agents, have long provided the foundation for understanding portfolio allocation and market dynamics. However, empirical evidence has demonstrated that investors frequently deviate from rational behaviour due to the influence of cognitive biases, emotions and heuristics. These findings have contributed to the development of behavioural finance, which offers a more realistic interpretation of financial decision-making. This thesis investigates the relationship between investor behaviour, financial advisory services and financial intermediaries within the contemporary financial environment. The study first examines the evolution of financial decision-making theories, moving from classical finance models to behavioural approaches, with particular attention to heuristics, cognitive biases and behavioural anomalies affecting investment choices. It then analyses the role of financial advisors and financial intermediaries, highlighting their importance in supporting investors, reducing behavioural errors and facilitating more informed financial decisions. Particular consideration is also given to recent regulatory developments and technological innovations that have transformed the financial advisory industry. The empirical part of the research is based on a questionnaire administered to investors, aimed at exploring their financial habits, investment preferences, attitudes towards risk and relationship with financial intermediaries. The findings provide insights into the factors influencing investment decisions and the perceived value of financial advice.