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 …
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 …
Earlier this month (September 2023) the team at Kitces.com released its 2023 financial advisor technology usage report titled Kitces Report: The Technology That Independent Financial Advisors Actually Use (And Like). (Download the Report here.) The Kitces Report provides a detailed analysis of data compiled from roughly 1,400 independent financial advisors’ responses regarding the technology applications they use (and don’t use) in their practice. Advisors rated their perceptions of value and satisfaction for the various …
Personality tests help individuals understand how their unique behavioral traits and tendencies relate to their saving, spending, and investing patterns. General personality factors, like those included in the so-called “Big Five” personality traits, impact money-related outcomes like income and net worth. So while we’re helping clients understand their unique traits with individual reports and insights, this same data can help firms predict what clients might do in the future. We can also predict which …
If you are a consumer of personal finance content like I am, you have by now undoubtedly heard one commentator or another derisively dismiss the idea of even mentioning the long-term cost of a daily Starbucks trip. They don’t want to hear about it—it’s a trope to be ignored. And this derision is coming from otherwise competent and professional personal finance sources. This phenomenon got me thinking: what’s going on here? Surely Commentator X …