Identifying and Guiding Investor Behaviors with the Investor Profile

Working with an advisor can add incrementally to your portfolio, according to Vanguard’s Advisor Alpha study. Half of the contribution is through behavioral guidance – helping clients make better decisions regardless of market decisions, guiding them to ignore the herds, and mentoring them to stick to a plan. These findings beg the question: if we added a framework to the guidance that advisors provide, would these benefits increase?

To create a better mousetrap of understanding investor behaviors, we have to add some science, the same kind of science we’ve used at DataPoints to define the tasks of successful wealth accumulators and to define the factors that contribute to building wealth. For the past two years, we’ve been working to create a comprehensive assessment of risk tolerance using psychometrics and principles from Industrial psychology to determine the key factors that contribute to overall good investing behaviors. This research was designed to create a scientific approach to measuring psychological risk tolerance, focusing specifically on past behaviors and experiences that contribute to how someone makes investment-related decisions.

Today we announced the release of the Investor Profile. Read more about the Investor Profile in our press release or download our overview here.


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