• Understanding Financial Styles Header Image
  • Understanding Financial Styles

  • An investor’s personality can speak volumes about their ability to spot opportunities and avoid risk. If more people truly “knew themselves” when it came to money over the last decade, it can be argued we would not have seen many of the individual excesses and mistakes that marked the recent economic slowdown.

    Many companies and experts have attempted to label various money personalities over the years. And while there is no definitive set of definitions, taking a look at these efforts can at least get you thinking about where you are on the spectrum and how that has affected your decision-making.

    • Venturers take a “nothing ventured, nothing gained” attitude with their money, but their potential pitfall is that they are overconfident in their level of preparedness.
    • Anchored individuals always “stay on the safe side,” but extreme risk aversion might leave them unprepared for things like inflation.
    • Pursuers will “try anything once” but their continual efforts to try the latest fad might leave them without a clear plan.
    • Adapters take investment situations “as they come” but may not be realizing their full potential as investors. 

    Now even if you have a handle on your money personality, what do you do with that information? If you are just beginning to think about the process of building wealth, it might make sense to seek advice from a trained financial professional, such as a CERTIFIED FINANCIAL PLANNERTM professional, who can conduct a comprehensive review of your financial situation. Or, you may choose to begin with an investment portfolio review by a financial advisor with FTB Advisors, Inc., who can help you ensure that your investments match your objectives.

    If you have never worked with a financial advisor before, one of the first steps in the process will be reviewing your needs and, perhaps, discussing your risk tolerance. 

    Why is risk analysis important before you make decisions with your money? Risk tolerance is an important part of investing. But the real value of answering questions about your risk tolerance is to tell you what you don’t know – how you earned your money, how outside forces have shaped your view of it, and how you are handling it now will affect every decision you make about it in the future.

    Here are some of the questions you might want to consider before you start work with a financial advisor:  

    • What is important about money?
    • What do you do with your money?
    • If money was absolutely not an issue, what would you do with your life?
    • Has the way I have made my money – through work, marriage or inheritance – affected the way I think about it in a particular way?
    • How much debt do I have and how do I feel about it?
    • Am I more concerned about maintaining the value of my initial investment or making a profit from it?
    • Am I willing to give up that stability for the chance at long-term growth?
    • What am I most likely to enjoy spending money on?
    • How would I feel if the value of my investments dropped for several months?
    • How would I feel if the value of my investments dropped for several years?
    • If I had to list three things I really wanted to do with my money, what would they be?

    One of the toughest aspects of developing a financial plan or an investment strategy is recognizing how your personal style, mindset, and life situation might affect your decisions. A financial advisor will understand this challenge and can help you think through your choices. Your resulting plan or strategy should feel like a perfect fit for you.


    ©2013 M.A. Co. All rights reserved.
    Any developments occurring after January 1, 2013, are not reflected in this article.