Neuroscience
The Investor DNA® model leverages cutting-edge neuroscience research to understand investor behaviour and decision-making.
The neo-cortex (upper brain) is responsible for conceptual and intellectual thinking, whilst the limbic system (the lower brain) is the emotional control centre, responsible for our emotions and our intuition. This creates a kind of 'tug of war' between our 'head and our heart', dramatically influencing our decision-making.
Investor DNA® measures this tension, revealing your client's preference for logical reasoning versus 'gut' intuition. The Investor DNA model is also based on research into left and right-brain specialisation. The left side of the brain is broadly associated with facts, maths, structure, and detail, while the right side is broadly associated with creativity, holistic thinking, and empathy.
Behavioural Finance
Investing involves a constant tension between logic and emotion, driven by the neo-cortex (top brain) and limbic system (bottom brain). A client's leaning towards 'thinking' or 'feeling' explains why different investors may be more or less prone to cognitive bias (flawed logic) or emotional bias (emotion-driven decisions).
Investor DNA® measures this dynamic, reflecting how the brain works. Behavioural biases can dramatically distort your client's perception, impairing rational judgment, and unknowingly sabotaging investment success.
Investor DNA® identifies a client's vulnerability to bias for greater self-insight, enabling both adviser and client to take preventative action to curb its impact, especially during market volatility.
To explore the extensive research that underpins Investor DNA®, please click here.
Psychology
Successful investing is as much about psychology as it is about the numbers. Markets don't respond only to facts and logic, they also respond to human emotions. The two are inextricably linked.
Investor DNA® integrates the psychological work of Carl Jung, the world's most renowned psychologist. Jung's work on personality and psychological type has influenced many leading diagnostic tools such as the Myers-Briggs Type Indicator (MBTI).
Jung's research is incorporated into the Investor DNA® model, adapted to the specific context of wealth management. This provides unparalleled insight into an investor's 'modus operandi'.
Investor DNA® measures four key constructs:
1. Information Processing: Intellectual vs Instinctive
2. Decision-Making: Analytical vs. Beliefs
3. Organisation: Structured vs. Flexible
4. Execution Style: Creative vs. Practical