Editor's note: In an earlier piece, Jane Wollman Rusoff described Barclay's Wealth and its U.S. rollout of a financial personality assessment.
Curiosity may kill cats but almost never financial reporters. So, curious about potential revelations, I sallied forth and took Barclays Wealth’s Financial Personality Assessment.
The test’s 36 questions measure, among other traits, risk tolerance, sensitivity to volatility and comfort with investing in financial markets — relative to the population as a whole. Its ultimate goal: to help Barclays advisors build portfolios that match clients’ financial personality and objectives.
As I anticipated, the portrait that emerged casts me as a conservative, nervous Nellie when it comes to market investing. I fear the loss of all my money and get spooked by short-term fluctuations. Indeed, I’m more likely than others to experience emotional stress from uncertainty, according to Barclays.
The good news — for the hypothetical advisor I’d consult were I a Barclays prospect: my high scores on perceived financial expertise and willingness to delegate certain investment decisions position me as ideal for a conversation with an advisor.
To accompany the test results, Barclays worked up a pretend-scenario in which I own a $20 million sugar business (sweet) and am worth $47 million (dream on). Actually, that’s similar to the balance sheets of some of the firm’s targeted ultra-high-net-worth clients.
Back to my assessment: Downside protection is indeed important: My low risk tolerance indicates I’ll accept lower long-term returns in exchange for minimizing the chance of poor outcomes. Top priority: maintaining my wealth.
I get more upset than most by short-term market fluctuations and may be monitoring my portfolio too often. Were my investments locked up, I’d feel high anxiety over being unable to access the money.
The results go on: I avoid investing in the market because I’m apprehensive that I may lose money or assume inappropriate risk.
My “mental barrier” to engage in financial investments is possibly based on an earlier failure to meet investment objectives. Happily, all of that part isn’t true.
Maybe I am uneasy about investing and decidedly conservative; but when it comes to practicality, my head overrules my gut. I do not sit on the sidelines.
As to decision-making style, I scored high on comfort with investment complexity and familiarity with financial markets. And yes, I also ranked up there in readiness to shift some investment decision-making to an FA.
As for a therapeutic solution, Barclays recommends offsetting “the emotional impact of investing” by using my “higher financial knowledge” to focus on “a rational long-term perspective.”
The starting point for maintaining my supposed incredible wealth would be the firm’s conservative model portfolio. That means allocating about 65% to cash and fixed-income-type securities, says Joseph Dursi, vice president-head of portfolio consulting and wealth management reporting consulting.
The equities portion — to diversify — would have an 18% allocation. Three percent would be in commodities, 5% in real estate and about 8% allocated to alternative trading strategies.
Overall, Barclays’ Michael J. Liersch, vice president-behavioral finance and investment philosophy, Americas, considers my FPA to be a real opportunity “to have a detailed conversation based on my [comfort] with financial complexity and a desire to have a relationship where I can offload some investment decision-making to a financial professional."
I’ll ponder that. Right now I want to fantasize about being worth $47 million.