Identifying and Guiding Investor Behaviors with the Investor Profile

According to Vanguard’s Advisor Alpha study, working with an advisor can add incrementally to an investor’s portfolio. Half of the contribution of an advisor’s value is through behavioral guidance. This guidance includes helping clients to make better investing decisions, ignore the herds, and stick to a strategy. These findings beg the question: Would these benefits increase if we added a framework to the guidance that advisors provide?

To create a better mousetrap of understanding investor behaviors, we have to add some science, the same kind of science we’ve used at DataPoints to define successful wealth accumulators’ tasks and the factors that contribute to building wealth. DataPoints created the Investor Profile, a comprehensive assessment of risk tolerance using psychometrics and principles from Industrial psychology. The DataPoints Investor Profile gives advisors insights into their clients’ risk tolerance and investing characteristics. The test is based on research designed to create a scientific approach to measuring psychological risk tolerance, focusing specifically on past behaviors and experiences that contribute to how a client makes investment-related decisions.

Today we announced the release of the DataPoints Investor Profile RTQ. Read more about the Investor Profile in our press release or download our overview here.