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The blog below is part of our 10th anniversary celebration at DataPoints. Firm Name: Radix Financial Year Founded: 2015 Firm Focus: Investment Management for global high-net-worth families Assessment used: Investor Profile RTQ How has your firm benefited from implementing assessments or other aspects of financial psychology? Using assessments allows us to intentionally pivot the focus of our meetings away from performance or benchmark conversations and toward goals and actions we can control. What’s the most significant …
Some Clients Feel Fear, Anxiety, and Worry More Than Others The tendency to feel worry, fear, and anxiety is normally distributed. Practically, this means that some of your clients will tend to experience these negative emotions more frequently than others, regardless of your efforts to help them become “fearless” investors, budgeters, etc. We refer to the tendency to feel negative emotions in an investing context as volatility composure, and it is related to neuroticism (also …
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 …
Financial psychology is at the heart of our product development and ongoing research here at DataPoints. Part of our research program includes examining investor-related characteristics. Our analyses include areas like confidence and composure. Our latest Client FinPsych Report explored the preferences, knowledge, and confidence of over 2,600 financial planning clients between February 2018 and May 2021. The results of this research help to identify areas where advisors can help clients’ improve investing-related decision-making. In other …
Last month a war (of sorts) was declared, pitting various risk tolerance companies against each other concerning their methodologies relating to portfolio risk assessment and analysis. The dispute appeared to be outside the realm of measuring a client’s appetite for risk. However, there is a very real and clear line of demarcation in the world of risk-tolerance assessment “advisortech” with respect to the method employed in assessing the investor’s so-called “risk tolerance,” particularly the …