Atlanta-based DNA Behavior International recently completed one of the largest behavioral finance studies, illuminating the spending, saving and goal-setting behavioral patterns of 35,000 investors.
 
“An investor’s decisions and actions may sometimes seem like wild cards,” says Hugh Massie, CEO of DNA Behavior International, “but the truth is that with each decision, goal or emotion, their behavior is predictable. We call this a person’s Financial DNA. And by learning and leveraging that, we can improve and accelerate the results clients achieve with their financial advisors.”
 
Massie and his team used the company’s proprietary online discovery process to glean 64 validated behavioral insights from these investors. Fifty percent of the cohort was female; 50 percent male. The youngest respondent was 19 and the oldest, 87. Their annual incomes ranged from $18,000 to $589,000.
 
“As an example of the findings, we found that higher risk-takers live in more affluent neighborhoods and borrow more for homes,” he says. “Our data also tell us that higher risk groups on average earn more; but, on an absolute basis, the sole top earners were in the lower middle range risk taking groups.”
 
Conversely, and not surprisingly, the study revealed that cautious investors tend to have the most equity in homes – an average of $200,000. Also discovered: The top spenders are Influencers and Initiators (two of DNA Behavior’s personality descriptors based on the assessments) who are promoters, more goal driven and seek out life experiences. The top discretionary spending category was dining out.
 
“Everyone has inherent behaviors of which they may not even be aware,” Massie says. “By using a real-time behavioral finance platform, financial advisors and their clients maximize communication, while identifying their risk profile, behavioral biases, spending patterns and goals-based planning preferences. Our study used the assessment tool – which is usually applied quite individually – to look at these natural behaviors in an aggregate way.”
 
The ultimate goal, he says, is to help financial advisors, wealth managers and other pros know which clients need attention, how and when, thus enabling them to accelerate their own performance and that of client portfolios.
 
“Using validated methodology to identify things like how likely a client is to delegate financial planning, how likely a client is to save/spend, how a client sets/pursues goals, and how emotional will a client become, for instance, in the face of market upswings and downswings,” Massie says, “we continue to demonstrate that advisors and their clients can best protect and build wealth through the added edge of this deeper information.”