Clients have various characteristics that influence their investment decisions. Many advisors understand that a significant part of the value of working with clients is helping them manage their mindset when it comes to investing. However, understanding investor psychology requires knowing what to measure. In the following text, we will examine several characteristics that can influence a client’s overall investor psychology, also known as behavioral risk tolerance. By measuring investor personality, advisors can identify which …
Psychometrics: Measuring Unseen Client Characteristics Psychometrics is the science and practice associated with the measurement of human characteristics. These are often referred to as “unseen” individual characteristics, including cognitive ability, personality, and knowledge. Typically, psychometricians are borne out of applied psychological and educational fields. Psychometrics has been used for over a century in a variety of fields for decision-making, counseling and coaching, and self-assessment, including, but not limited to: Clinical psychology and psychiatry Educational …
Knowledge is power, and the basis of all knowledge is having the right data. Datapoints (or, data points, if you like) are the smallest form of data. Think of them like information atoms. Alone, they’re seemingly small and insignificant. But when you combine them, you can discover trends, uncover essential information, and better understand the world around you. These minuscule particles of information can be essential to learning about others and ourselves. Here’s what …
What Are Money Scripts? Money scripts are general beliefs about money that are often unconscious and learned during childhood or early adolescence. Money scripts tend to be passed down through generations. These beliefs tend to be partial truths about money or those who have (or do not have) money. Money scripts are related to different financial outcomes. Money scripts are often measured in financial planning or coaching to understand how financial beliefs might impact …
A personality test can efficiently measure a client’s money-related attitudes, values, and other characteristics. While not a perfect science, a well-developed test can accurately assess a client’s personality without some downsides of in-person interviews, which can take time and be impacted by interviewers’ biases or lack of structure. But like any assessment, personality tests are prone to some errors. These errors could include how clients respond to a test based on wanting to look …