Despite their wealth, 41% of high-net-worth individuals worldwide wish they had more self-control over their financial behavior, according to the latest report in the Barclays Wealth Insight series released Monday. HNW individuals in the U.S., however, score low on the need-for-more-discipline scale, the report found.
A need for increased financial discipline is likely to be felt most by those at the wealthiest end of the scale ($16 million +), where 45% of respondents wish they had more self-control. This is despite the report’s finding that those who want self-control are less likely to be satisfied with their financial situation.
The report, “Risk and Rules: The Role of Control in Financial Decision Making,” is based on a global survey of more than 2,000 high-net-worth individuals, and provides an in-depth examination of wealthy investors from a behavioral finance perspective. It considers the different financial personality traits that exist among wealthy investors and the different self-imposed rules and strategies they put in place to deal with these traits.
Behavioral finance research has gained traction over the past decade. Last year, Dan Ariely, a Duke University professor of psychology and behavioral economics, discussed some of his research findings about how investors make decisions with AdvisorOne.
The Costs of ‘Emotional Trading’
The Barclays survey found that emotional trading can cost investors up to 20% in returns over a 10-year period, and showed that those who employed high strategy usage had on average 12% more wealth than those who did not use rules.
Globally, respondents in Asia-Pacific, particularly in Taiwan and Hong Kong, have the greatest desire for financial discipline. In contrast, developed markets show less desire for self-control over financial behavior, as illustrated by respondents in Spain, Australia and the United States
Markets showing the greatest desire for financial discipline:
2. Hong Kong
Markets showing least desire for financial discipline: