Type and Money Not long ago, Ron Stapleton, manager Of Shell Oil’s $1.5 billion bond portfolio joined a group of colleagues to explore the depths of a very intricate tool used for making investment decisions –the human mind. Sponsored by Institutional Investor magazine, the session introduced some of the conclusions of my research on how type preferences impact an individual’s tolerance for risk and volatility, approach to asset allocation, investment choices and a host of other issues facing investors every day. The project began when I joined the MBTI®community following a 15-year career in private banking. I decided to make money my special project, For the next five years I asked participants of MBTI®seminars, who had validated their type, to fill out an investment questionnaire. A sampling of the questions and their results are summarized below: Question: Which would you prefer for your investment portfolio: 1. To reduce risk and sacrifice return 2. To increase return taking more risk The Extraverted Perceivers took a significant lead– in favor of the higher risk option #2. EJs came in second, IPs third and IJs last. A series of other risk-related questions confirmed this order. In terms of whole type, ESTPs, closely followed by ENTPs ranked as the highest risks takers. INFJs followed by ISFJs and ISTJs (tied) ranked as the lowest The other two sets of preferences played a less significant role. The S/N differential was minimal. The T/F dimension showed some differences but more among Ns than Ss. Follow-up interviews revealed that ETPs who combine an interest in money per se and a willingness to take financial risk can be very aggressive investors whose portfolios and life fortunes fluctuate more than most. ESFPs, with sufficient disposable income, however, also emerged as high rollers, viewing the investment process as a game, which provides fun and excitement. NFPs typically, expressed the least interest in financial issues unless charged with the financial well being of their family or philanthropy. When not, they preferred investments and advisors that required minimal attention thus freeing them to devote their energies to other areas. Appetite for risk, however, does not necessarily correlate to investment success. Overall Js and IJs in particular placed a higher value on setting up and sticking to a well-defined asset allocation strategy, which they felt protected, their assets against the fluctuations of the markets. In many cases, TJs also expressed a higher level of satisfaction with their overall results. Question: How would you prefer to invest? a. Through a mutual fund b. In stocks directly c. Through a financial advisor Mutual funds were favored by the Is over the Es, by the Fs over the Ts and by the Js over Ps. The S/N dimension had little impact. Direct investments in stocks on the other hand were favored by the Ss over the Ns by a significant margin – by both STs and SFs, - and by the Ts and Ps over the Fs and Js to a lesser extent. ESTPs and ESTJs expressed the most interest in managing their own portfolios; ENFJs and INFJs the least. Advisors were favored by ENFJs and ENFPs and somewhat to my surprise by ENTJs. ISFJs and ISTPs had the least interest in working with an advisor. Overall Es and Ns favored working with advisors more than Is and Ss. The other preferences were too close to call. Question: Rank your interest in financial/investment issues Of all 16 types, ESTJs were the most interested in financial issues, INFPs the least. Interest was highest among STs, followed by NTs, SFs with the NFs, trailing far behind. Es, Ts and Js tended to have a higher level of interest in financial and investment issues than Is, Fs and Ps. Question: How would you assess your appetite for financial risk? Low, Medium or High Of the 16 types, ESTJs, ENTJs, ISTPs, ESTPs and ESFP (in that order) self assessed as high risk takers. INFP and ENFJs self assessed as the lowest. Generally, Es and Ss self assessed slightly higher than Is and Ns. Ts were distinctly higher than Fs (except for ESFPs). The J and P dimension became significant only when connected to another preference. Question: What is your investment priority? A. To provide security B. To build wealth ESTPs, ENTPs and ESFPs had the highest interest in building wealth, with TPs, followed by TJs as the most significant preferences. INFJs and ISFJs had the highest interest in providing security. Question: What is your level of anxiety about making proper investment choices? Is, Fs and Ps expressed a considerably higher level of anxiety than Es, Ts and Js. Ss were marginally higher than Ns. INFPs and ISFPs indicated the highest level of anxiety. The lowest level was expressed by ESTJs, ENTJs, INTJs and ISTJs, in fairly close succession Question: What does money mean to you? (Rank the following options) Security for old age Is, Ss and Fs chose this option as a top priority more frequently than Es, Ns and Ts. Js and Ps were equal. ESFJs chose it the most frequently. Power and ability to influence events Overall Es, Ss, Ts and Ps placed higher value on this option than Is, Ns, Fs and Js. ESTPs and ESTJs chose it more frequently than others. Ability to improve the quality of life of those I care about Ns and Fs chose this option more frequently than Ss and Ts. Both E/Is and J/Ps came in equally. ENFPs ranked it highest. Ability to support my own aspirations and growth Almost all types, indicated a high interest in this option and, scores were close for all four preferences. ENFJs ranked it the highest. In summary type seems to have the highest impact on risk tolerance, the financial planning process and level of interest in investment issues and less impact on actual choice of investments such as stocks and bonds. The research, however, continues and should reveal further patterns in the future. Shoya Zichy is a NY city based seminar leader, coach and author of the McGraw-Hill publication Women and The Leadership Q. Her work has been featured in Fortune, Barron’s, The Chicago Sun-Times, Newsday, CNN and as the cover story of Plan Sponsor magazine. Formerly she had a 15-year career managing clients and products at Citibank, Merrill Lynch and American Express. She is president of the NYC chapter of APT. More information is available on her website www.ColorQProfiles.com. She can be reached through |
||
| Articles Index | ||
back to top |
