You may have seen the recent piece online by Kevin Peachy the Personal Finance Reporter for BBC News.
He opened his article with the following observation:
“A learner driver’s natural instinct, when their vehicle is veering to the left, is to overcompensate and find the car is swerving to the right.
With experience, the driver learns how to maintain a steady course by taking stock of where they are on the road and making slight adjustments as they go along.
The same can be argued for making choices about financial investments. Panic buying and selling when markets plunge or soar might not be the best course for what is generally a long-term strategy – even if that feels like the thing to do.”
He goes on to note that ignoring our natural instincts when it comes to investing is a mistake and that the psychology and personality of an individual is a very important factor when it comes to making financial decisions.
We couldn’t agree more and we were delighted when one of our clients who had also seen this article pointed out that our approach to investing would appear to have been ahead of the game when taking account of behavioural finance.
It has long since been an integral part of our process to ensure we not only know the basics on all our clients but that we have established their investing personality and carried out a complete client interview to ensure we know what makes them tick.
Of course we need to know all the general details of assets and liabilities but we find time and again what strikes a chord with all our clients is our genuine interest in how they feel about their financial position and wealth, what their future goals are and how they would approach their investment strategy.
We make a point of finding out about their values and goals, important relationships, interests and how they manage all aspects of their life. Along with the investment personality quiz this allows us to establish the psychology behind the individual and to ensure we get the investment strategy right.
We strongly believe our approach goes beyond the typical financial adviser’s questions about attitude to risk and market exposure and that once we complete the full interview process anyone who proceeds to work with us can be confident they have an investment strategy which fits with their personality and is tailored to their psyche.
Whatever the personality type we also strive to educate all our clients on the philosophy behind investing and adopting a good investment strategy for the longer term. We will never advocate panic buying when the markets shift dramatically up or down and we strongly believe in a maintaining a good investment discipline.
Roland already touched on this in his last blog and our Informed Investor brochure available for download from this site covers our approach to investment discipline in great detail.
The New Year is a great time for people to start to review their finances and although we are already racing through February there is no time like the present to really find out what you value when it comes to your wealth and what investment strategy would suit your personality.
We’ve been told in the past our interview process is “like a therapy session” and many clients have come away from the meeting really feeling like they have finally grasped what is important to them financially and as if a weight has been lifted.
Why not get in touch and book a “session” on the purple sofa to find out more about your personality type when it comes to investing and to start a new approach to planning a better financial future.
Dr Claire Armstrong