By Len Hayduchok
What does money give to retirees? Regardless of where they live and whether Delaware is their primary or secondary residence—or just a vacation destination—wealth provides a sense of accomplishment, pleasure, security, or control. Getting to know a retiree’s view of money helps to identify their Financial Personality. We reviewed both the Spender and the Saver in the first 2 articles of this series. Now, we delve into the personality of Type #3, the Investor before we conclude our series with Type #4, the Planner. Let’s meet the Financial Personas using fictitious, non-gender-specific names.
Meet Jesse. Jesse likes having money and gets excited to see it grow and tracks it regularly. Jesse is optimistic about finances and spending on material things, but it’s not a driving factor in Jesse’s life. Jesse is fairly knowledgeable about finances, especially investments. If Jesse were to find $100 in a coat pocket, the question would be, “How can I ‘put it to work’ for me?”
Jesse’s overall personality is success oriented. Jesse likes to win in sports, at work and at money. Jesse is an Investor, enjoy seeing investments grow and a sense of pride for that. The primary end goal for Jesse is to build wealth. The benefit of that is that Investors’ money is productive—more productive than for other Financial Personalities, putting them in a better Financial position. They’re engaged and on top of their finances and have a generally good outlook. Even when their investments may not be doing well, they have confidence that they will over time.
The downside of this behavior pattern is that they could potentially take too much investment risk. They could even border on being reckless in their investing and potentially allow themselves to become obsessed with money. Investors can also compare themselves with others, often making them judgmental of others’ finances. They could even be socially exclusive, limiting themselves to only others they deem financially worthy to associate with. They define financial planning too narrowly and need a bigger vision of planning other than just growing their portfolio. They might also benefit from a perspective that “richness in life” extends beyond financial wealth.
Although they may know a lot about investing, they have a need for a planner, since their view of finances can be too narrowly focused on their net worth. They need to have a broader understanding of what financial planning entails. The financial strategies that are most needed by Investors are related to taxes and risk. While there are many areas Investors feel comfortable with, they may recognize “Minimizing Taxes” as an area they’re less knowledgeable about. They may continue their laser focus on growing what they have and worry about taxes later or take steps to address how taxes may be chipping away at their wealth. Investors should also consider their need for “Neutralizing Risk,” as they tend to be risk-takers by personality, so they would benefit from instruments and strategies to minimize risk.
Investors are confident in their decisions and may be less open to changing what they are doing, even if they would benefit from it. They also tend to overlook risk or options they believe interfere with their goals. They tend to rely on their financial resources to meet all their financial needs but may have a better outcome if they consider other financial strategies (such as Neutralizing Risk using insurance products and Transferring Wealth if legacy objectives are important to them). They may also be well-served by less risky investments in volatile markets but may be reluctant to consider options such as annuities, cash value life insurance or other options they may not have familiarity with or are out of favor with them and others they share investment ideas with. In retirement, Investors want to enjoy the finer things in life with the wealth they’ve created, [make sure this statement doesn’t contradict the one about not having specific objectives for their wealth.]
Individuals are more than just simply one personality. Most people behave in patterns regarding finances that reflect a combination of characteristics from each personality. Each person carries their own set of strengths and weaknesses associated with their financial personality. One key to building better financial habits is for retirees to understand how they view finances, their connectedness to it–so they learn to do finances in the way that takes advantages of their strengths and minimizes their weaknesses. No matter a person’s personality type, getting guidance from a strong Financial Advisor is highly recommended. In particular, a Certified Financial Planner™ practitioner acting in a Fiduciary capacity would be a good candidate to help retirees make the best choices given their personality and priorities, filling in the gaps in their knowledge and behavior patterns to get the best result.
Past articles in this series,
“Retirees and Their Financial Personalities: Type 1, the Spender”
“Retirees and Their Financial Personalities: Type 2, the Saver”
Len, the Delaware Retiree Advisor, is a Fiduciary, Certified Financial Planner™ with over 30 years’ experience navigating the complexities of Financial Planning and Retirement Planning. As the founder of The Delaware Retiree Connection, and the director and owner of Dedicated Financial Services, Len offers his wealth of experience to guide others through the mire of Financial and Retirement Planning. As a Certified Life Coach, he pairs his financial expertise with a heart to help others who want to make the most of their retirement plan.
Investment Advisory Services are offered through SGL Financial, LLC, an SEC registered advisory firm. Insurance products and services are offered through individually licensed and appointed agents in appropriate jurisdictions. Leonard Hayduchok NJ License #9243813, Dedicated Financial Services LLC, NJ License #1663601, Leonard Hayduchok, DE License # 1331748; Dedicated Financial Services LLC, DE License # 3000323897.