The Science behind MoneySign®
Table of Contents
Table of Contents
The investor’s chief problem — and even his worst enemy — is likely to be himself.
Investor & Economist
Just like every other species on the planet, humans are hardwired to act on their instincts. Early humans relied on their survival instinct, and even today, our first response to any information that we receive is emotional. In fact, emotions play a larger role in our everyday decision-making than we realise.
In his book Unshakeable, life coach and business strategist Tony Robbins asserts“80% of success is psychological and 20% is mechanics”
— pointing to how psychological factors influence life outcomes.
It isn’t surprising that even our financial decisions are driven by the core traits and behavioural patterns that shape our personality. However, when it comes to securing financial health, most of us ignore our emotional response to finances, and neglect our psychological relationship with money.
The idea that all our decisions, including financial choices, are driven less by logic and more by emotions has been scientifically validated through years of research in the field of behavioural finance, a branch of behavioural economics that studies how human psychology influences the behaviour of investors, analysts and financial markets at large.
The concept of MoneySign® stems from the philosophy that each of us has a unique financial disposition that is influenced by our inherent nature and life experiences. It finds its roots in the study of evolutionary history, specifically in the theory of evolution proposed by Charles Darwin in his seminal text, On the Origin of Species.
The concept of financial psychology has been around for more than 40 years. It originated when cracks in traditional financial theories appeared in the 1970s, prompting psychologists Daniel Kahneman and Amos Tversky, and economist Robert J. Shiller to further investigate why traditional financial theories fail. Through their research, they concluded that individuals are not purely ‘rational’ and have mental limitations that are shaped by their emotional biases.
Keeping this in mind, we at 1 Finance designed the MoneySign® framework to identify your personality type based on your core traits and predispositions. The MoneySign® assessment takes into account your aspirations, emotions and financial information to understand how you navigate money choices.
Key Insights
Does psychology
Influence your financial decisions?
The magnitude of financial risk we’re prepared to take depends greatly on the experiences we’ve encountered during our lifetime.
Our perception of the world we inhabit is informed by genetic factors and life experiences. By extension, our financial decisions are influenced by similar factors.
We rationalise our financial decisions based on our worldview and social context. For instance, people who started their investing journey looking at the global surge in crypto prices during the latter half of the 2010–20 decade had a very different view of their finances compared to those who started saving in the 1980s when safe deposits, gold and real estate were the primary investment options.
Times change and financial products evolve, but the importance of understanding a person’s psychology, and its impact on financial outcomes, does not diminish. Contrary to what traditional financial theories might indicate, people’s individual financial needs cannot be addressed through a universal asset allocation model.
Over the years, several authors and successful investors have studied the behavioural patterns of people and documented their views on the importance of being aware of investor psychology.
Morgan Housel in his book The Psychology of Money says,
“financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know.”
Key Insights
What is
MoneySign®?
MoneySign® is a scientific assessment of your core traits and emotions represented in the form of an animal/bird/aquatic creature. It is a zoomorphic depiction of the key characteristics that make up your financial personality.
We have identified eight MoneySign® profiles that best symbolise a range of financial temperaments and attitudes:
The Stealthy Shark
We’ve condensed years of research to closely study these species and their core qualities, which helped us identify facets of their natural instincts that matched with the traits that humans display when dealing with money. We conducted rigorous research to identify facets of these species’ natural behaviour that are closely linked to the psychological and emotional factors that influence the financial decision-making of humans.
To create this framework, we enlisted the help of psychological experts who offered their insights and guidance throughout the process. The MoneySign® personality assessment has been developed in consultation with Dr Lokesh Gupta (PhD in Psychology), Dr Anita Manglani (PhD in Psychology), and Mr Hardik Singh Ahuja (Masters in Psychology).
Dr Lokesh Gupta
PhD in Psychology
Dr Anita Manglani
PhD in Psychology
Mr Hardik Singh Ahuja
Master’s in Psychology
Dr Lokesh Gupta
PhD in Psychology
Dr Anita Manglani
PhD in Psychology
Mr Hardik Singh Ahuja
Master’s in Psychology
Key Insights
How is your
MoneySign® assessed?
Your MoneySign® is assessed based on a comprehensive, widely accepted and scientifically validated personality assessment framework — the five-factor model of personality (a.k.a. the OCEAN model). Conceptualised in the 1980s, the model, as we know it today, was first proposed by the personality psychologist Lewis Goldberg, although its history dates back to the mid–20th century.
The five-factor model started gaining worldwide acceptance in the 1990s, and since then, has been applied in several psychological studies that link human behaviour to financial outcomes. Largely, the model has been replicated across a range of human societies, suggesting that it defines the personality of human beings across the world.
The MoneySign® framework uses relevant facets of personality within the five-factor model to capture the traits that influence your financial decisions. This model explains the five core factors that characterise an individual’s personality:
Constitutes the desire and ability to seek new experiences, think unconventionally and visualise the future creatively. Key facets of this factor include intellect, imagination, creativity, and curiosity.
Reflects the ability to follow through on goals and objectives, a desire to be careful and diligent, and the ability to regulate immediate gratification with self-discipline. Key facets of this factor include ambition, discipline, consistency, and reliability.
Indicates the ability to relate to others and enjoy their company—a state where an individual draws energy from others and seeks social connections or interaction—as opposed to being alone (introversion). Key facets of this factor include being outgoing, energetic, affectionate, and confident.
Measures how cooperatively and compassionately an individual interacts with others. Key facets of this factor include empathy, cooperation, tactfulness, kindness, and loyalty.
Considers an individual’s tendency towards displaying impulsive behaviour, negative personality traits, emotional instability, and self-destructive thinking. Key facets of this factor include anxiety, pessimism, fearfulness, insecurity, and vulnerability to stress.
Key Insights
Why is it important to
Know your MoneySign® ?
Your MoneySign® depicts how the various facets of your personality play a role in the way you manage your personal finance
— your risk preferences, how you save and invest, your priorities and so on.
Your financial plan would be difficult to implement if it did not take into account your monetary behaviour; your core traits, preferences, and priorities; your attitude towards returns; your predisposition for picking certain asset classes; your comfort with risk-taking; and your inherent nature. At 1 Finance, we focus on enhancing your overall financial well-being, which can’t be achieved if your financial decisions are not aligned with your personality traits, as defined by your MoneySign®.
Key Insights
How does knowing your
MoneySign® helps you improve your financial decisions?
Once you have a clear understanding of your temperament, you can reinforce positive behaviours and work on gradually eliminating negative patterns. Knowing your MoneySign® is the first step to attaining holistic financial well-being, a state where you can be at peace with your finances and in control of your financial journey.
Furthermore, from an advisory perspective, MoneySign® helps us provide hyper-personalised recommendations, taking into account your traits and tailored to your needs and goals — a necessary shift from the cookie-cutter approach to personal finance planning that is generally adopted across the financial services industry.