Decoding the Investor Mindset: 6 key insights that drives investment decisions
Following our article on how we create a set of personas that represents FINNOMENA’s target audience. We briefly touched upon the insights that we discovered during our research process. These are the insights that help us decode the pattern of an investor’s thought process, triggers, and behaviors; which allow our working teams to make well-informed, user-centric decisions as we continue to deliver value to our customers.
As a reminder, our personas are...
Each persona represents different groups of people with vastly different investment mindset and behaviors. Nonetheless, there are common factors that influence their decision-making process.
Here are 6 key insights we learned.
1. There are 2 types of investors — those who are passionate about investment, and those who are not
Among our Personas, Passionate Investor and Retired Master are those who are genuinely interested in and enjoy exploring the world of finance and investment. Both are highly capable and passionate, the only difference is their life stage. While Passionate Investor still enjoys the game, Retired Master already reached their goals and started to look for other life goals.
These 2 types of investors are often exposed to the world of investment at a young age. They have fun learning and exploring and tend to have very high financial literacy. They are also more inclined towards technical rather than fundamental analysis when it comes to researching and forecasting market trends.
We identified Passionate Investors through a series of questions and observations. It should be noted that, while Passionate Investors tend to spend a considerable amount of time within the world of investment, not everyone who spends a lot of time on their investment plan is a Passionate Investor. There are a number of people who consistently monitor and adjust their port but only perceive it as an important task that needs to be done without actually enjoying it.
2. Non-passionate investors will rely on someone they trust
This is evident, especially, in the case of Mindful Investors who, although possess high financial literacy, tend to heavily rely on someone they trust to help them with investment decisions and strategies. This person can be either someone they personally know, a professional Financial Advisor, or even an influencer, whom Mindful Investors deem as more knowledgeable and successful than themselves when it comes to investment.
According to our research, if a non-expert person knows an expert who can guide them, it will greatly accelerate their investment journey, especially during the early stages where lapses happen most frequently. In cases where a non-expert doesn’t have access to an expert, they would likely become a Fixable Floater instead.
3. Life stage plays a bigger role than age
Our participants ranged from the youngest, 20 years old, to the oldest, 60 years old. Naturally, opinions of someone in their 20s and someone in their 60s would be greatly different. However, the factor that influences their behavior the most was not particularly their age, but the life stage they’re in.
For example, we had two participants who were both in their 30s — one was single and financially-stable, while the other had just started a family with a lot of responsibilities on their shoulders; their mindset towards investment were night and day. The first one was a Mindful Investor who consistently managed their own port; while the family guy didn’t have enough time or capital to invest consistently and became a Fixable Floater.
Similarly, not all participants who were in their retirement age could afford to adopt a more relaxed attitude towards investment. Unless they were in a stage where they can happily retire, a 60-year-old investor might behave more like how we expected an investor in their 20s to be — aggressive and highly-driven.
4. Age affects how investors perceive insurance products
While age is not as compelling a factor as life stage, it is still an important factor in many cases. Insurance products, for example, are clearly age-impact. Participants above 35 years old are much more inclined towards viewing insurance as a crucial investment due to higher level of responsibility and growing health concerns. Younger participants, on the other hand, had a relatively dismissive attitude towards insurance.
Our two oldest personas — Bread Winner and Retired Master have both mentioned how important insurance is in their portfolio — perceiving insurance as a form of investment, not just for wealth protection.
5. Responsibility doesn’t correlate with risk level
One of our pre-interview assumptions was that people with a high level of responsibility — such as having an extended family to take care of or having to shoulder a lot of liabilities — would be more risk-averse. However, after interviewing participants, the results turned out to be the opposite. Since high risks mean high returns, participants who are not financially stable would want to take the risk in order to reap the rewards.
Among our personas, Bread Winners ranked highest in their level of responsibility. However, they are also the biggest risk takers, as well as the most open for new investment opportunities.
6. The less satisfied someone is towards their current wealth, the more open they are towards new assets
The level of wealth one is satisfied with is very subjective. Nonetheless, we found that participants who were not yet satisfied with their current wealth would constantly look for new investment opportunities. This means they are among early adopters of new assets, particularly non-traditional assets such as cryptocurrencies and NFTs.
Meanwhile, those who perceived themselves as financially-stable wouldn’t be interested in new investment means. They would either be early majority or late majority with a wait-and-see attitude. Unless they are completely convinced about the products, they would not start investing.
It can also be argued that the primary concern of these two groups are different. Financially-stable people are more worried about losing the capital they already have; thus, they are more cautious when presented with new opportunities. On the other hand, financially-unstable investors are more concerned about their returns, aspiring to achieve their goals; which is why they want to seek out more beneficial investments.
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These 6 points are just ones of many insights we discovered during our research process and have since been included in our conversations at various organizational levels. Understanding insights that affect our customer behaviors allows us to identify the problems and discover new business opportunities, as well as engage our target audience with higher efficiency and yield better outcomes.
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FINNOMENA UX Research Team
