April 9, 2025, by Helen Yang, CFA, Founder & CEO | Andes Risk
Are You a Passive Investor, Trend Follower or Contrarian?
With renewed market volatility following Trump’s tariff policy, are you giving your clients the right advice—and meeting each of them where they are?
In moments like these, understanding your client’s investor type—how they tend to react to market ups and downs—can be a game-changer. Are they a passive investor, a trend follower, or a contrarian? Your conversations (and your coaching) should be tailored accordingly.
I met Dr. Andrew Lo, a prominent financial economist, when I was at MIT, and we shared the prestigious Harry Markowitz Award in 2011. In his research, he developed a short questionnaire to assess investor type. I saw tremendous value in it and incorporated it into the Andes platform early on.
This insight allows advisors to tailor their guidance, anticipate client reactions, and build stronger, more resilient relationships.
Here’s a quick overview of the three most common investor types:
Passive Investor
Takes a long-term view and sticks with buy-and-hold strategies—even through market dips. These clients tend to stay calm, but may need reassurance during extreme uncertainty.
Trend Follower
Follows market momentum—buying when prices rise and selling when they fall. They’re particularly vulnerable during volatile times and may need proactive coaching to avoid panic-selling.
Contrarian
Goes against the crowd—buying when others are fearful. These investors can spot opportunities in downturns but may require validation and data to act with confidence.
This questionnaire is part of the Risk Tolerance Plus flow on the Andes Risk platform, so advisors using Andes already have this insight on their clients—alongside risk tolerance.
Personally, I’m a passive investor. That doesn’t mean I don’t experience emotion—I just take what I call the “ostrich strategy”: when the market gets scary, I choose not to look, so I can avoid making emotionally driven decisions that I may regret later.
Why It Matters Right Now
The market’s reaction to political headlines—like the tariff policy—can trigger different emotional responses from each investor type. Instead of treating every client the same, advisors who understand these patterns can:
- Proactively calm anxious clients before they react
- Focus on education for those likely to chase trends or flee the market
- Reaffirm long-term plans for passive and safety-first investors
- Lean into opportunities with contrarian or risk-tolerant clients—with a disciplined plan
This is what we mean by Risk Tolerance Plus—not just understanding how much risk a client can take, but how they’re likely to behave when volatility hits.
Final Thought
In a world of 24/7 headlines and policy uncertainty, advisors who tailor their conversations to the type of investor sitting across from them are better equipped to build trust, reduce panic, and protect long-term outcomes.
Interested in seeing how Andes Risk helps advisors identify investor type and integrate it seamlessly into the client journey? Register for a demo of the platform.
