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The Anonymous Investor
Trust is the major obstacle for Anonymous investors. They
often work with several financial professionals and have a
multitude of investment accounts scattered among a half-
dozen or more institutions. No single advisor will have “too
much” information about them, or “too much” of their overall
portfolio to manage. Such steps are typically seen as a way
to protect themselves from fraud, institutional meltdowns
or unsolicited sales pitches. Often, this is a reaction to a
profoundly negative experience which the Anonymous
investor has had in the past.
The major drawback of such an approach is the lack of a
co-ordinated investment strategy. By spreading their money
among different institutions and different professionals,
Anonymous investors practically ensure that no one will
be able to see the “big picture.”There’s
also needless duplication of fees and
paperwork, which can be costly and
While there’s certainly
something to be said for
spreading one’s eggs among
different baskets, the price which
the Anonymous investor
has to pay for such
protection is steep.
The lack of a holistic
financial strategy can
be a significant drawback,
particularly during the lead-
up to retirement. Without a
thorough understanding of an
individual’s complete financial
picture, even the best professionals
will find it difficult to formulate an
effective investment strategy.
The Freespender
Think of the Freespender as
the opposite of the Empire-
Builder: Freespenders see
money not as an end in
itself, but simply as a means
by which they acquire
material possessions. They
often have trouble
postponing gratification
when it comes to
buying things, and
often put themselves
in precarious financial
positions to get what
they want.
Ironically, most
Freespenders are aware of
their bad habits, and this
leads to feelings of guilt
and anxiety. They sincerely
want to save for long-term
financial goals, yet they feel
trapped by their habits. They
want to improve and control
their finances, but they don’t know how.
There are a number of concrete steps that such personalities
can take to control their financial desires. An automatic
savings plan can help enormously. Financial products such
as annuities can remove the ability to make big impulse
purchases (an annuity ties up capital that could otherwise be
used for spending), while giving the Freespender the income
needed to accomplish their financial goals. In extreme cases,
professional financial counsellors can help Freespenders
recognize and understand their destructive behaviours, and
work toward making a positive change.
Keep in mind that the above profiles illustrate extremes. In the real world, most of us don’t fit
neatly into any single personality; rather, we’re a mix of different traits from different profiles.
Also note that your investment personality will almost certainly evolve over the course of time –
sometimes depending on your experience in the market.
Whatever your personality, the first step to making the most of investing is consulting with
your wealth advisor. Working together, you can identify specific challenges and opportunities
presented by your investment personality, and develop a portfolio that’s tailor-made for you.