by Greg Klein | November 3, 2015
What kind of investor are you—confident, diligent, impulsive, reserved or, God forbid, tumultuous? The British Columbia Securities Commission polled Canadians to categorize them by personality and find out how that affects some of their investment decisions. The result was a 77-page study released November 3.
Psychologists believe five main personality traits “measure most of what is distinct about individual personalities,” according to the Smarter Investor Study. On behalf of the BCSC, Innovative Research Group polled 2,407 people aged 35 or older across the country and measured them for extroversion, agreeableness, conscientiousness, emotional stability and openness to experience. (Take the quiz yourself.)
Using those traits, the study lumped each person into one of five investor personalities: confident (18% of respondents), diligent (22%), impulsive (13%), reserved (20%) and—in disconcerting predominance—tumultuous (28%).
Overall, 52% of respondents said they had no investments, 19% were classed as DIY investors and 30% stated they invested through an adviser. Most of the study focuses on that 30% and their relationships with advisers. Oddly enough, more DIY investors (72.4%) than those using advisers (70%) expressed satisfaction and confidence with their current portfolio and with investments in general.
Researchers also measured how well each personality type could recognize six signs of fraud, defined as follows:
- advised to avoid tax by moving money outside the country
- offered insider information
- strongly pushed investor to act immediately
- claimed offer was available only to a select few
- guaranteed high returns with no risk
- advised to invest because friends or family were doing so
Confident types did best, followed closely by diligent, then reserved, impulsive and tumultuous. As for those who have actually reported getting sucked into a fraudulent investment, confident types led with 8%, followed by diligent (7%) and reserved (7%). Surprisingly, impulsive scored least of all at 5%. Predictably, on the other hand, tumultuous placed highest, with 12% even though their category was least likely to invest in the first place.
The study forms part of the BCSC’s awareness program that “provides investors with the tools to research and assess potential investments in order to protect people from unsuitable or fraudulent investments.”