They have just finished discussing the client’s need to assume a portfolio allocation that undertakes a large amount of risk to meet the client’s financial objectives and goals. For example, imagine a client completes an RTQ with the advisor present. This can lead to potentially detrimental results to an investing portfolio. It continues to be quite common for this assessment to be administered to clients either in person or virtually with the advisor present (in person or virtually, to some extent). When does this happen in financial planning? The typical scenario is in administering risk tolerance questionnaires (RTQs) to clients, a commonly used test as a result of industry requirements for measuring risk tolerance. The same can happen when asking clients to complete tests with the advisor present. This is akin to self-presentation, whereby we unconsciously want to put our best foot forward or to “present” ourselves in the best light possible when around other people. If the advisor is present while the client completes the test, the client may feel the need to respond in a way he believes the advisor wants him to. The same idea can apply when asking clients to take tests as part of the financial planning process. American Psychological Association, 2022īy influencing the participants in a study, the results might be inaccurate, leading to all sorts of misguided conclusions.Such cues can distort the findings of a study. For example, a smile, a nod of the head, or any other sign from someone associated with the study in an authority or leadership position could have inadvertently led the results to be confounded (aka, messed up) by what is known as demand characteristics.ĭemand characteristics: in an experiment or research project, cues that may influence or bias participants’ behavior, for example, by suggesting the outcome or response that the experimenter expects or desires. Even in studies that only require completing surveys, the demeanor and communication of experimenters could unduly influence the participant to answer in a certain way or maybe think twice about providing personal information, etc. The experimenters had to be careful not to influence the study participants. For example, think about the now famous marshmallow experiments with children (delayed gratification) or even the Ashe studies on conformity with adults. One of the problems with laboratory studies, where participants are invited or opt-in to an experiment, is that the researcher can potentially influence the study results. Shifting gears for a moment, let’s consider how behavioral scientists conduct research. In-Person Testing: Demanding the Wrong Thing From Clients Both can lead to inaccuracy in a client’s scores, making them, at best, slightly higher or lower than their “true” score, and at worst, can leave the client and the advisor with a completely inaccurate view of the client’s personality. These errors could include how clients respond to a test based on wanting to look their best or their perception of what the advisor wants from them. While not a perfect science, a well-developed test can accurately assess a client’s personality without some downsides of in-person interviews, which can take time and be impacted by interviewers’ biases or lack of structure.īut like any assessment, personality tests are prone to some errors. A personality test can efficiently measure a client’s money-related attitudes, values, and other characteristics.
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