What type of investor personality are you?

by Sep 18, 2017Intermediary Tips, Investment Tips

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Behavioural finance, or the study of investor personality types has become an area of increased interest.

Investor personality types and the study of behavioural finance

Let’s face it, we all love a quiz that tells us what type of person we are, and reading how much that personality type resonates with us. But on a practical note, knowing what type of investor personality you are can help to you make sounder investment choices. For financial advisors and individual investors who want to improve their investment return, the psychology of investing can prove very invaluable.

Whether it’s learning when to cut your losses on a bad investment, or realising that a higher level of calculated risk could give you the return you’re aiming for. Knowing why you make certain investment choices can be the first step to changing patterns and becoming a more educated investor.

Investor Personality Studies

There are several studies of investor types out there, so where do you start?

The CFA Institute breaks the personality types into four main groups: Preservers, Accumulators, Followers and Independents.  Then there’s the well known Bailard, Biehl and Kaiser (BB & K) five-way model which is based on investor confidence levels and their preferred investment method.

The Barnwell Two-Way Model* appears on the surface to be much more clear-cut, grouping investors as either “passive” or “active”. Each study has its merits, although all three could suggest that a person’s feelings towards risk may change based on the circumstance.

One key consideration when defining investor personality type is the balance of objective (what you want to gain and why), and constraints (time horizon, liquidity and perception of risk). Also, are the funds you are investing for yourself, your family, your business, or your client.

A good question to ask would be, how much does a person’s propensity towards risk change if, for example you are an institutional investor? Are you more likely to play it safe for a better chance of ROI, or would your personality overrule this in favour of possible higher returns but on a bigger gamble?

*The Barnwell Two-Way Model developed by Marilyn MacGruder Barnwell of the MacGruder Agency, Inc. in 1987.

Psychonomic Investor Profiling

The route of classifying investor personality types that we’ll use here is based on Jonathan Myer’ study. It holds that a person’s propensity towards risk is unlikely to change regardless of circumstance. Psychonomic investor profiling instead suggests an investor’s feelings towards risk could be coloured by how they perceive that particular risk, this is in addition to how they feel about money in general, i.e. whether it hurts more to lose a pound than it does to gain a pound.

As Jonathan Myers, an industrial psychologist specialising in behavioural finance explains:

“it doesn’t assume that people have totally different attributes depending on the circumstances they’re faced with. In a psychonomic approach, investors have the same attributes but they are mitigated – or their balance changes – according to the situation and the way they deal with it.”

Six Investor Personality Types


Conservative in investment choices, they have a strong need for financial security and prefer to avoid high risk ventures. This type of investor is more likely to trust their own financial knowledge over that of a professional advisor.

They hate losing even the slightest amount of money, as a consequence any investment decisions require a great deal of time, thought and investigation.


This type of investor is more likely to trust gut instinct rather than doing thorough due diligence, they believe in luck or providence. They invest with their heart rather than head, following a “hot tip” or whatever seems fashionable.

This optimism and propensity to seize the day can be rewarding. But it can also lead to a reluctance to cut losses on a bad investment decision in the hope that things will work out eventually.

TechnicalTechnical investor personality

Technical investors make their financial decisions based solely on hard facts and numbers.

They’re screen-watchers, actively trading on price fluctuations and ready to move quickly should they spot a trend early on. They can find reward in their almost obsessive diligence and are constantly looking for the edge when it comes to the latest tech developments


Rather than being too busy to invest, this personality type lives for the buzz of the markets and trading. Constantly checking the latest price movements, they are always buying and selling based on the latest bit of gossip or hearsay from newspapers and magazine stories.

But because of this deep dislike of inertia, it can mean these investors miss out by not holding out for a better price.


This type of character is more laid back when it comes to finance and investment, in fact they’re more likely to be the one handing their funds over to a professional advisor to take care of things.

They believe there’s more profit to be found in hard graft than financial investments. Consequently, once they’ve made an investment they’re not likely to check up on how it’s doing until they really have to.


An informed investor is one who uses information from multiple sources before making any financial decisions. They have a constant eye on investment markets as well as the economy to work out what could potentially give them a better chance of return.

They will happily listen to expert advice and read financial opinions, only going against the market after very careful consideration of all the pros and cons. They have financial confidence and believe in their own choices, trusting that their knowledge and experience will translate into long term gains.

Did you see yourself in any of the personality types?

Whether any of the above rang true or was a little too close for comfort, the most important thing is this: Know thyself, and know thy investor strengths – and weaknesses.

Perhaps you know that your heart leads you when your head should, or maybe when investing funds on behalf of others you’re aware of playing things too safe, when you could be garnering greater returns. In either case, using an investment platform you can trust and that does a thorough job of due diligence, can make a big difference to how you invest and could possibly improve your ROI.

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