Described how should a financial advisor deal with and counsel the client who is looking at making sub-optimal finance decisions due to biases. Your role as a good financial advisor is to not let the client make such financial mistakes. For all three situations, you need to give your answer in at least 500 words. The description of the financial advice and for explaining the behavioral biases for each situation.

Situation 1 A client has a nuclear family with three members (husband, wife and a small child). They currently own a Swift Dzire car bought in 2016 for INR 8 lacs. The car running is primarily in the city, but there are a few outstation trips on the highway. The total annual car running is 15,000 km (12,000 in city and 3,000 on highways). Recently with the advent of safety crash ratings, the client has become paranoid and is worried about taking the car for highway trips. After a discussion with his wife, he is planning to sell his current car and buy a bigger SUV car which is costing INR 15 lacs. As a financial advisor, what will you advise the client? Is it financial sense to buy the new SUV or does the client has some other alternative option without comprising the safety aspect on the highway trips?

Situation 2 Your client is a salaried person with an annual income of INR 15 lacs and manages to save INR 5 lac every year after all expenses. After COVID and working from home, he has developed an interest in financial markets and invested some money in equity markets and made decent profits of around 50%. However, the client is also upset internally that he has missed out on the Bitcoin boom where the prices have increased 10x between March 2021 to October 2022. He is also an avid cricket fan and after seeing multiple advertisements about cryptocurrency during the T-20 World cup 2021, has become impatient and looking to park 50% of his monthly savings into bitcoin now. As a financial advisor, what will you advise the client? Which biases are being exhibited by the client?