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The Big Five Personality Traits: Understanding clients' personalities to support successful outcomes

A robust framework for categorizing personality has been around for at least half a

century. Over that time, psychologists have used it to explain a variety of life outcomes, from health to educational achievement. Yet it has been in only the past decade or so that economists have taken a serious interest in the framework and recognized its usefulness in explaining personal finance outcomes such as wealth accumulation,

retirement planning, spending, compulsive consumption, indebtedness, and risk-taking.

This article summarizes these recent findings and explores earlier research into the links between personality and individuals’ preferences for communication as well as their information-seeking and susceptibility to persuasion. This article makes the case that advisors, armed with the personality profiles of their clients, might be able to anticipate the behavioral headwinds (or tailwinds) their clients are likely to face and prepare to use the most appropriate tools to bring about behavioral change. Such customized service would be more effective and lead to greater client satisfaction (cont...)

This article was published in Investments & Wealth Monitor (July - August 2021). You can download your copy below.

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