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How Diagnose an Overconfident Accumulator Client Type

Since these clients are successful in business or other pursuits, they often assume they'll be successful investors.

Michael M. Pompian, 11/20/2014

This month's article is the 11th in a series called "Deep Dives into Behavioral Investor Types." This series is intended to help advisors create better relationships with their clients by deeply understanding the type of person they are dealing with from a financial perspective and being able to adjust their advisory approach to each type of client.

As we learned in the last series, there are four behavioral investor types (BITs): the Preserver, the Follower, the Independent, and the Accumulator. As noted in previous articles, the learning process for each BIT will be a series of three articles:

1. Part I will be a diagnosis of each BIT and discussion of its general characteristics.

2. Part II will be a deep dive into the biases of each BIT.

3. Part III will be how to create a portfolio for each BIT.

This article is Part I of the Accumulator BIT.

BIT Orientation Quiz
I am often asked how to diagnose what category of investor a client falls into. The following is a helpful way to initially identify an investor type. I have highlighted in bold below the responses that identify the Accumulator Behavioral Investor Type.

1. My main role in managing my money is:
--a. To be the guardian of my wealth by not making risky investments
--b. Actively trading my account to accumulate wealth
--
c. Doing research before investment decisions
--d. Listening to others for advice on managing money

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

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