• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>Is Your Client Looking for a Leader?

Related Content

  1. Videos
  2. Articles
  1. Roth Advantage May Be Bigger Than You Thought

    Even if your tax bracket doesn't change, using a Roth can mean 20% or more aftertax income in retirement versus a Traditional IRA, says T. Rowe Price senior financial planner Christine Fahlund.

  2. Improve Your Financial Aid Eligibility With These Tips

    Families seeking need-based aid for college must be mindful of what does and does not count against aid and how student- and parent-owned assets affect the loan payout.

  3. How to Make the Most of Your 401(k)

    In this special presentation, get the answers to key questions about the quality of your plan, whether your savings are on track with your goals, how to allocate assets, and what to do with assets when you leave your job.

  4. The Friday Five

    Fed stays intent on tapering, Tiffany shares look rich, a big deal in pay TV, and Target feels a chill from Canada.

Is Your Client Looking for a Leader?

Follower-type clients may follow the lead of friends, colleagues, or fads without regard to a long-term plan.

Michael M. Pompian, 05/15/2014

This month's article is the fifth 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 adjusting 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. If you missed any of these articles, you can find them in my article archive on MorningstarAdvisor.com.

In this series, I am covering each BIT in three parts:

--Part I will be a diagnosis of each BIT and discussion of its general characteristics 
--Part II will be a deep dive into the biases of each BIT. 
--Part III will be how to create a portfolio for each BIT. 

This article is the first part for the Follower BIT.

Diagnosing the Follower BIT
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 Follower BIT. 

BIT Orientation Quiz

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.

blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.