Measuring the cognitive biases
that shape financial decisions
Sigmalign is a behavioural finance research initiative developing a psychometric instrument to identify and quantify the biases that influence investor behaviour. The instrument is in independent academic desk review, with a Canadian advisor pilot planned for late 2026.
Building the instrument, then the pilot
Despite decades of research establishing that cognitive biases systematically distort financial decisions, the advisory industry lacks a standardised, validated instrument for measuring these biases at the individual client level.
The Sigmalign Pilot Study is a planned 60-day observational study designed to establish feasibility and early reliability data with licensed Canadian financial advisors and their consenting clients. Before the pilot opens, the instrument undergoes a structured psychometric validation round using an independent panel, alongside an independent academic desk review of the instrument design.
Phase 1 is not a claim to validity. It is the structured data collection effort required to eventually make one.
Intervention arm (planned): advisors will receive the Sigmalign Score report and conduct a structured debrief conversation with the client, with behavioural events logged across the study period.
Comparison arm (planned): advisors will receive the score report only, with no structured debrief protocol. This separation lets us assess the role of the debrief as the active ingredient.
The Sigmalign Score — plainly explained
The Sigmalign Score is a psychometric assessment that measures five cognitive biases known to influence financial decision-making. It is grounded in behavioural economics and prospect theory, drawing on the published work of Kahneman, Tversky, Thaler, Odean, and others.
How it works
Clients complete 25 scenario-based questions, each presenting a realistic financial situation and four possible responses. There is no "right" answer — responses are scored for the degree of bias they reflect, not financial knowledge.
Each of the five bias dimensions is scored independently on a continuous scale. The composite Sigmalign Score is the unweighted mean of those five scores.
What it measures
- Loss Aversion (LAS) — tendency to weight potential losses more heavily than equivalent gains
- Overconfidence (OS) — tendency to overestimate personal financial knowledge or predictive ability
- Herding Susceptibility (HSS) — tendency to follow peers, media, or market trends rather than a personal plan
- Anchoring (AS) — tendency to over-weight an initial reference point when making hold, sell, or rebalancing decisions
- Recency Bias (RBS) — tendency to over-weight recent events when forming expectations about future returns
What Phase 1 is designed to establish
- Internal consistency (Cronbach's alpha) for each dimension
- Test-retest reliability across the 60-day window
- Face validity from client self-report
- Feasibility of advisor-facilitated administration
- Preliminary advisor-client behavioural event data
What this study does not claim
Phase 1 is not a validation study. With a planned sample of 30 to 150 clients across 3 to 5 advisors, it cannot establish construct validity, predictive validity, or published test-retest reliability on its own. A formal study protocol is available on request.
| Band | Score Range | Interpretation |
|---|---|---|
| Calibrated | 5.0 – 9.9 | Bias strength is low. Client is likely to respond to advisor guidance in a plan-consistent manner under moderate stress. |
| Active | 10.0 – 13.9 | Bias is present and likely to influence decisions under stress. Structured communication is recommended. |
| Reactive | 14.0 – 17.9 | Bias is elevated. Client is at meaningful risk of plan-inconsistent decisions during market events. |
| Critical | 18.0 – 20.0 | Bias is severe. Proactive advisor engagement and a documented coaching plan are strongly recommended. |
Band designations are descriptive, not diagnostic. They do not constitute investment advice, suitability determinations, or clinical assessments. Thresholds are provisional and will be empirically calibrated using Phase 1 and Phase 2 data.
Kris Podolski brings twenty years of practice as a financial planner to this research. Holding both the Certified Financial Planner (CFP®) and Chartered Investment Manager (CIM®) designations, he has spent two decades observing how cognitive patterns — rather than financial knowledge — determine whether clients follow their own financial plans under stress.
That observation is the origin of Sigmalign. The existing tools available to advisors — risk tolerance questionnaires, KYC forms, suitability assessments — measure stated preferences and financial knowledge. None of them measure the bias profiles that predict how a client will actually behave when markets move against them.
Sigmalign is an attempt to build that instrument properly: grounded in behavioural science, designed for the Canadian advisory context and the CFR suitability framework, and developed through a structured research process that includes independent academic desk review before any commercial release.
Kris welcomes dialogue with academic researchers working in behavioural finance, financial decision-making, and psychometric instrument development.
Interested in the research?
We are actively seeking academic researchers with expertise in behavioural finance, psychometric instrument development, financial decision-making, or related fields. Collaboration may take several forms:
- Instrument design review and item-level feedback
- Statistical consultation for Phase 1 analysis
- Co-authorship on research outputs from Phase 2 onward
- Academic advisory and ethics oversight roles
A full study protocol is available on request. We are happy to share it in advance of any conversation.
Reach out directly by email. Please include your research area and affiliation — we will respond within two business days.
Email Kris Podolski