If you have watched a fintech product demo that includes anything remotely related to financial psychology, you might hear the word “personality” thrown around a lot. For example, I heard one very confident salesperson recently refer to his platform as measuring “investor personality” when the tech was measuring the client’s current feelings about investing. Personality characteristics predict a wide range of future outcomes regarding human behavior. The Big Five (or OCEAN) model of personality has been …
What is a swim meet? Maybe you’ve never been to one, but I’ll bet that you have a concept in your head for what a swim meet is like. It may not be accurate or have been created from any direct experience, but you have some idea, or schema, for what a swim meet includes and doesn’t include. You’re probably thinking of a pool, swimmers, timers, lane ropes, and cheering. Your concept of a swim …
Our latest financial psychology term describes how we can sometimes fall prey to errors in decision-making about others. The American Psychological Association defines fundamental attribution error this way: the tendency to overestimate the degree to which an individual’s behavior is determined by his or her abiding personal characteristics, attitudes, or beliefs and, correspondingly, to minimize the influence of the surrounding situation on that behavior (e.g., financial or social pressures). Your neighbor who is still unemployed …
Budgeting. Investing. Spending. Each of us reacts to money-related topics on a scale from negative to neutral to positive. Money attitudes are not perfect predictors of financial behaviors. However, how we feel about budgeting, spending, and investing impacts our financial goals. Indeed, our attitudes can affect the entire financial planning process, especially when working with others who may not share our perspectives. What Are Attitudes? Let’s start with the basics. What is an attitude? …
BFinancial services as an industry is moving at warp speed to embrace psychology. The trick is that we have a definition problem when describing the field that encompasses the mind, behavior, and money. If you look at the media coverage of finance and psychology, most content focuses on cognitive errors in decision-making related to investments. In other words, most of the media and most financial services concentrate on behavioral finance. However, this focus is …