Describe Yourself

Describe Yourself invites you, the investor, to self-identify your traits and preferences across several dimensions, including risk preference, spending habit, and decision-making process, which helps your advisor understand you more deeply and deliver better personalized advice for better outcomes. 

Some of the traits, for example, risk preference, are also examined using a questionnaire, and it is not uncommon for self-perceptions to defer from results of objective tests. Seeing such differences helps us understand ourselves better.

As with other behavioral profiling, there are no right or wrong answers. You are who you are and the goal is for your advisor to understand you better to provide better services.

Risk Preference

Cautious: A cautious investor prioritizes the safety of their capital above all else. They prefer stable and low-risk investment options, such as government bonds or high-quality blue-chip stocks. This type of investor aims for steady, albeit lower, returns to avoid significant losses. They focus on long-term financial security and preservation of capital, avoiding volatile markets and speculative investments.

Rational Risk Taker: A rational risk taker carefully weighs potential risks against expected returns, making informed and calculated investment decisions. This investor balances their portfolio with a mix of both low-risk and higher-risk assets, such as a combination of bonds and equities. They rely on data, research, and analysis to guide their choices, aiming for moderate risk yielding satisfactory returns. They are comfortable with some market volatility and potential loss for long-term benefits.

Adventurous: An adventurous investor embraces high-risk, high-reward opportunities. They are willing to accept significant market volatility and the possibility of substantial losses in pursuit of greater returns. This type of investor often focuses on growth stocks, speculative investments, and emerging markets. They seek excitement and lucrative opportunities, resulting in a more volatile portfolio with higher potential for capital appreciation.

This trait is also examined through the risk appetite questionnaire and the risk tolerance test, and you can cross-examine the results to identify any discrepancy. If the results match, it will confirm the accuracy of the test.

The Logic-Driven and Emotion-Driven

Logic-Driven: A logic-driven investor bases their decisions on facts, data, and logical analysis. They prioritize objective information and systematic evaluation when making investment choices. This type of investor is less influenced by emotions and more focused on consistent, rational decision-making. They prefer strategies that are supported by empirical evidence and sound reasoning.

Emotion-Driven: An emotion-driven investor makes decisions based on feelings, instincts, and emotional reactions. They are often influenced by their current emotional state and market sentiment. This type of investor may react quickly to market changes, driven by fear, excitement, or other emotions. They prioritize personal intuition and emotional cues over purely analytical approaches.

Spending Habit

Free Spender: A free spender enjoys spending money and tends to make purchases spontaneously. They prioritize lifestyle and experiences over saving, often indulging in luxury items, dining out, and frequent travel. Financial planning and budgeting might not be their main focus, as they derive satisfaction from immediate enjoyment and material possessions.

Thrifty: A thrifty individual is very careful with their money, prioritizing savings and budgeting. They seek out discounts, use coupons, and avoid unnecessary expenses. Value and cost-effectiveness guide their spending decisions, and they often prefer to save for future security rather than splurge on current desires.

Savvy Spender: A savvy spender strikes a balance between enjoying life and being financially responsible. They are strategic about their spending, making thoughtful purchases that offer the best value. They budget effectively, invest wisely, and ensure their financial health while still allowing for occasional indulgences and experiences.

Independent Thinker vs Follower

Independent Thinker: An independent thinker makes decisions based on their own research and analysis. They trust their judgment and prefer to evaluate information independently. This type of investor is confident in their ability to make investment choices without relying heavily on others’ opinions. They value autonomy and often seek unique investment opportunities.

Follower: A follower relies on the advice and recommendations of financial advisors or other experts. They prefer a guided approach, often mimicking strategies of trusted individuals or institutions. This type of investor is comfortable taking advice and finds security in following established guidance. They prioritize expert opinions over personal analysis.

This trait is also assessed in the questionnaire for herding. You can compare the results to see if they are consistent, which can drive deeper conversations.

The Optimistic, Realistic, and Pessimistic

Optimistic: An optimistic client generally expects positive outcomes in their financial life. They are confident about future financial growth and opportunities, often taking calculated risks with the belief that things will turn out well. This positive mindset can drive proactive financial behaviors and investments.

Pessimistic: A pessimistic client tends to expect unfavorable outcomes and is often cautious with their finances. They may focus on potential risks and setbacks, which can lead to conservative financial behavior. This cautious approach often results in significant savings and careful planning to avoid potential financial troubles.

Realistic: A realistic client has a balanced and practical view of their financial situation. They acknowledge both potential opportunities and risks, making decisions based on factual information and probable outcomes. Their approach to financial planning is pragmatic, aiming for steady and sustainable growth without undue risk.

The Numbers Person and Visual Person

Number Person: A number person bases their investment decisions on quantitative data and financial metrics. They focus on numbers, statistics, and detailed analysis to guide their choices. This type of investor prefers concrete, data-driven insights and values precision and accuracy. They are comfortable with complex financial reports and numerical information.

Visual Person: A visual person relies on charts, graphs, and visual representations to make investment decisions. They prefer to see trends and patterns visually to understand market movements and investment potential. This type of investor values intuitive and easily interpretable information. They are drawn to visually presented data that simplifies complex information.

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