Finance Personality

Transcription

Finance Personality

Investor's Dialogue® GmbH
Baut Brücken zur Welt der Finanzen
Investor’s Dialogue
How to make an illiterate Investor literate
or
learning the skilful way to handle your financials
Background Material for International Conference
"Improving Financial Literacy"
hosted by the Russian G8 Presidency in Cooperation with the OECD
Session 6: Best practices and next steps to improve financial literacy
Moscow, November 29 - 30, 2006
Dr. Doris Schönemann / Beatrice Zwicky
Investor's Dialogue® GmbH , Zürich, 2006
Investor's Dialogue® and
Zurich University of Applied Sciences Winterthur
Joint Venture in Research and Education
Research work carried out in June 2006
Questionnaire completed by 360 persons
Questions asked regarding the following topics
• Questions defining the Finance Personality of private clients "Geldpersönlichkeit"
• Test of knowledge on financial topics and self-assessment
• Statistical questions
Results
• Knowledge is poor, even with simple topics
• Own knowledge is overestimated, "overconfidence"
Costs and Risks are perceived incorrectly
Which of the following assets
is the most secure?
Equity
Which of the following assets
yielded the highest returns?
4%
81 %
Banking account
63 %
6%
Real estate
50 %
44 %
Bonds
42 %
9%
6%
8%
Don‘t know
Concept of Risk and Return not grasped correctly
Which of the following products
contains the highest risk?
Equity
Banking Account
Options
Funds
Mortgages
Real Estate
Credit
Life Insurance
Bonds
Installments
Structured Products
Pension products (3a)
Don‘t know
63 %
0.3 %
50 %
14 %
2%
3%
37 %
2%
6%
14 %
13 %
1%
6%
Highest cost of canceling contract
within the first three years?
6%
1%
3%
11 %
34 %
11 %
20 %
41 %
7%
9%
4%
20 %
25 %
Even seemingly simple Questions cannot be answered
Why is it more reasonable for a person earning an average salary to invest
into funds than invest into equity and bonds directly?
Dividends and interest on direct investments
are taxed at a higher rate
1%
The investment into funds is cheaper than
the investment into equity and bonds
2%
The invested money can be diversified more broadly
50 %
Funds shield against high losses
28 %
Don‘t know
19 %
Discrepancy between Self-Assessment and
Knowledge shows "Overconfidence"
1 0 0 .0
9 0 .0
8 0 .0
7 0 .0
6 0 .0
5 0 .0
4 0 .0
3 0 .0
2 0 .0
1 0 .0
Self-Assessment Index
Knowledge Index
352
343
334
325
316
307
298
289
280
271
262
253
244
235
226
217
208
199
190
181
172
163
154
145
136
127
118
109
100
91
82
73
64
55
46
37
28
19
10
1
0 .0
Investor’s Dialogue 12 Years of Experience in guiding
Private Clients to Financial Literacy
1.
2.
Many investors are bored by financial topics or cannot find access to topics
Some overestimate there knowledge, some don’t think themselves to be fit
for the theory
Our Method to cope with this set of problems:
• Start with the Finance Personality
• Making finance interesting from a personal point of view
• Establishing a common basis for dialogue
Content of the Basic Seminar for Private Clients in
Financial Literacy – Excerpt of the Program
1. Get to know the strength and the weaknesses of your “Financial Personality”
Helps the participant to judge his / her way of handling money.
2. Don’t live without financial Goals
Show the participant the relevance of budgets and long term planning of
financial matters, matching wants and needs.
3. Don’t disregard basic rules of the financial market
Introduce the concept of risk and return, which many people do not understand.
Helps understand why diversification is important and why one should stick to a
personal investment strategy (risk profile).
Content of the Basic Seminar for Private Clients in
Financial Literacy – Excerpt of the Program
4. Essentials of Basic Know-how
Investment instruments: from account to options.
Financial key indicators and important financial expressions.
Reading an account / deposit statement.
What can you expect from your bank?
5. How to discuss with your bank
Pricing
How to set up your accounts to best serve your needs.
Discussion with your banker, which products to chose.
Common Basis for Dialog
Finance Personality of Private Client
By a simple set of questions, phrased in non-financial language, we gain the
interest of the private client. The private client additionally gets insights about:
• his / her financial potential
• his / her behavior regarding decision making
• his / her communication style
• his / her investment behavior (horizon / risk)
Once personal interest is established, the learning process gets a good start
and ongoing commitment.
The RFP® Finance Personality
Financial Potential
Potential
Financial
1 Minimal
2 Limited
3 Average
4 Above average
5 Maximal
The finance personality
is defined by 4 factors.
Each of the factors has
5 dimensions.
Decision Behavior
Behavior
Decision
1
2
3
4
5
RFP®
Controlling
Involved
Goal oriented
Insecure
Disoriented
Finance
Personality
Investment Behavior
Behavior
Investment
1
2
3
4
5
Maximising Income
Spending oriented
Neutral
Savings oriented
Maximizing Wealth
Behavior in
in Dialog
Dialog
Behavior
1
2
3
4
5
Simple
Emotional
Colloquial
Bussinesslike
Reserved
Financial Potential
Human
Capital
Wealth
Potential
Income
Social
Network
Investment Behavior
Living-today
Living-tomorrow
Oriented towards today
Spending
Oriented towards the Future
Saving
Decision Behavior
Control
Personal
Behavior
Goal
Insecurity
Experience
and
Knowledge
Dialog Behavior
Emotional
Personal
Pattern of
Dialogue
Professional
Pattern of
Dialogue
Rational
Factors
Financial Potential
How to implement?
Set goal to mach potential
Investment Behavior
Adapt financial plan to fit to
Finance Personality
Decision Behavior
Chose financial products to fit
the way decisions are taken
Dialogue Behavior
Use personal communication style
Results
•
The participants of our training feel more at ease with their financial situation
•
Many of them start to reorganize their financial situation once they have learned
some basics and how to cope with banks
•
A smaller percentage start a financial planning followed by the seminar
•
Some participants change to delegating more of their financial decisions to
specialists, but consciously controlling them
•
A small percentage start trading actively after visiting the seminar
Set-up of Seminar
•
20 participants - Private Clients
•
2 sessions - each 4 hours, 2 weeks apart
•
Lecture and group workshop
•
Documentation including Finance Personality Test
Next Projects
Joint Venture with Zurich University of Applied Sciences
Winterthur
•
Lessons for employees
•
Lecture in Behavioral Finance and Financial Literacy
•
Teaching teachers (of public schools for training of children)
•
Deep analysis of topics within Financial Literacy, especially related to
lifecycle problems

Finance Personality

Transcription

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