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4 Financial Personalities and How to Work With Them

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The analytics firm DNA Behavior has a tool called Financial DNA that uncovers clients’ behavioral biases in order to help their advisors deliver a better portfolio.  

“Our main run of business is working with advisors and firms to really uncover the financial personality of clients,” Leon Morales, vice president of DNA Behavior, told ThinkAdvisor via phone.

The Financial DNA tool asks 46 questions to assess a client’s risk profile, behavioral biases and communication preferences.

“It helps the advisor create the portfolio based on the behavioral biases and risk score,” Morales told ThinkAdvisor. “That is the one deliverable that we really hammer out. It really helps the advisor know that that [client] is in the right portfolio.”

DNA Behavior works with nearly 2,000 advisors, and one of its requirements is that advisors must first take the 46-question quiz to determine their own personality type.   

“Everyone has their own behavioral biases,” Morales said. “Advisors come from all different types of [personality] profiles, so if they come in with their own behavioral biases, you could see where that could influence how they make decisions with their clients or guide them to the decision. What we really try to do is make sure they know their own behavioral biases and then how the client [acts].”

ThinkAdvisor talked with Morales to find out the four overarching personality types uncovered through the Financial DNA tool and the behavioral biases that are associated with each of those personality types. Keep reading for the four types, with some tips for how to work with those clients:

“Goal Setting” Personality

“Goal Setting” Personality

Someone with a “goal setting” personality is usually considered an “aggressive investor,” Morales said.

“They’re going to be looking at the overall number and they look at their investments in a consolidated view. They’re sort of very bold.”

Behavioral biases: Consolidated view, overtrading, optimism bias and risk taking.

What you need to know to work with a “Goal Setter” personality: “Sometimes they have blind spots they don’t realize,” Morales said.

One way to help goal setters make decisions is to provide them with options.

“Providing options can be the best thing you can do for [a] goal setter,” he said. “And get to the bottom line. They don’t need to have long drawn-out stories. In fact, they get almost bored if there’s too much storytelling. They learn by discussion. It might appear if you’re talking with a goal setter that they’re challenging you, but quite honestly they learn by discussion. It makes it easier for someone when they’re working with an advisor to have discussions.”

“Lifestyle” Personality

“Lifestyle” Personality

Someone with a “lifestyle” personality tends to be “instinctive,” Morales said.

“They don’t really research,” he said. “It’s not in their core wheelhouse to want to do a lot of research. Then tend to listen to people they respect. They hear things and they trust and they go with it. They also tend to be spenders. Following budgets and things like that are not necessarily intuitive to them.”

Behavioral biases: Spender, herd follower, instinctive and status quo adherent.

What you need to know to work with a “lifestyle” personality: Because this personality is “very open,” Morales said, they will openly express their views and verbalize.

“If you provide them with too much detail, they will shut down,” he explained. “For instance, if you’re working with a lifestyle [personality] and you’re sending a lot of documents to read, don’t ever expect them to read them because they just don’t. They will show up to the meeting and act like they didn’t even receive the email.”

Morales said to also expect this personality type to be more concerned about the relationship than business.

“They will talk about their last vacation, who they know, and if it gets down to business you’re lucky,” he said. “They develop relationships relationally. It’s harder for them to get excited about goals or talk about money.”

“Stability” Personality

“Stability” Personality

This personality is known for risk aversion and loss aversion, Morales said.

“They’re going to be very timid,” he said. “Especially when the markets start changing and being volatile, they’re going to be nervous and they need reassurance … they need to be patient through the long haul.”

Whereas a goal setting personality will be rational in their market response, the stability personality will be emotional with losses.

Behavioral biases: Risk aversion, loss aversion, fear of regret and disposition effect (greater willingness to realize gains than losses).

What you need to know to work with a “Stability” personality: “They’re very feelings-based,” Morales said. “Keeping it very cordial and comfortable is important. You can usually get an indicator of a stability type. They’re usually a little more shy. It doesn’t mean they’re completely introverted because they have extroverted qualities but they’re not going to be really forceful.”

The stability personality will not “set the agenda” or tell the advisor “this is what I need.”

“The advisor is going to really have to guide them and pull that out of them,” Morales said. “They will follow instructions, as long as they’re guided. They like to have instructions. And they really like to know ‘Why am I doing this?’ They don’t just do it because someone says to; they really need reinforcement of why am I doing this.”

“Information” Personality

“Information” Personality

Someone with an information personality will do a lot of research, Morales explained.

“They will read the prospectus,” Morales said. “They will want to know, [and] they’ll be more detailed in nature.”

The information personality type may be too serious and modest.

Behavioral biases: Saver, mental accounting, pattern bias and benchmark focus.

What you need to know to work with an “information” personality: “if you do sent them documents, they will read them,” Morales said. “They will be prepared for the meeting. If you give them instructions, they will follow through with them.”

Morales said this personality also likes transparency.

“They can be suspicious if they feel that you’re not providing all the facts,” he said.

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