Styles of Investors | Print |
Styles of Investors, Allan Katcher, Ph.D.


LIFO® styles are patterns of behavior that are preferred in various life situations.  When pronounced they can indeed be predictive of behavior. Assuming familiarity with the styles I will devote this article to descriptions of the behavior involved in investments.  One should keep in mind that investing involves both patterns of behavior when conditions are perceived to be favorable and when they are considered dangerous and risky.  Different styles will perceive situations as containing more or less risk.

For the broker, the key to effective responses is identifying the buying style of the prospective clients and having the flexibility to alter presentations accordingly. The best clues will be revealed by previous buying behavior of clients.  Thus one who is hesitant about making choices needs time for consideration, needs to check with support people and needs reassurance. A more independent spontaneous person will act on the basis of perceptions, judgment and the kinds of answers he receives.  Another type will need to study data, track stock patterns, and look for proof before making decisions.  Still another will depend on the nature of personal relationship that is established – need to see the broker as a friend, requiring frequent contact.


Let’s consider the various types. 


This person is influenced by ideals, integrity and respect others hold for the business conducted by the broker.  Clients will be receptive to suggestions by the broker.  However, it may be important to keep the commitment low during initial investments, to allow such a client to be reassured.  If risks are high, even though the client may be influenced to commit, anxiety will be high, there will be a high need for reassurance and an inability to tolerate much loss.  He will blame both himself and the broker for failing results.  It is especially important not to promise too much otherwise the client will feel betrayed and behavior may be unpredictable.  It may be useful to determine if the client has someone they rely on and to involve that person in presentations. 


They may also favor investments that are of benefit to others more than simply buying a company for profit in an area that has a questionable reputation, e.g. buying an educational company stock instead of a tobacco company. Long-term investments in well-established companies may be more appealing.  In some cases he may persist in holding on to a company despite evidence that it might be wise to sell. While one can gain assent by being overly forceful and compelling, it is necessary to understand that assent may not mean a wholehearted commitment.  It is wise to find out how the client really feels to avoid the risk of apparent compliance and the resulting dissatisfaction and resentment.  Complaints are a significant indicator of concern of unhappiness and should be attended to promptly. Keeping track of his investments and letting him know of changes is especially important in demonstrating your commitment to service.  One should take pains to contact the client before difficulties will be encountered as well as to keep in mind his preferences for area investment.  There will be a certain amount of loyalty to the broker whom he trusts. Remember to keep him abreast of a wider range of investment vehicles/markets rather than sticking to a few ones and keep in frequent contact.



This client is more self-assured, confident of his own thinking and judgment and fairly spontaneous in decision-making.  Risk is challenging – he is interested in gains that are significant, not ones that yield only modest returns.  He is most impressed by a confident and knowledgeable broker who presents his case in a concise way, outlining benefits and leaving the decision to him.  Prolonged conversation and explanations are considered boring unless directly related to a special interest. Success is the factor that will keep him motivated to invest more.  He may challenge the broker and evaluate him by the manner in which he defends his position.  If investments start to decline he will prefer to cut his losses quickly and reinvest for a more promising stock.  Similarly, if dissatisfied with the treatment he receives, he may move his account to another broker.  He may be attracted to ownership in a variety of areas rather than sticking to a few solid investments. Failures will be followed by anger and rejection.  Prompt responses to questions and actions will be expected and even demanded.  He will expect you to make recommendations and to be informed when you do so.  This client will also appreciate expressions of gratitude for his business.  Remember the importance of contacting him first, provide choices but ask him to choose the first one.  A risk taker, he likes the market when trading volume is heavy.  Investing all has to do with timing for him.



This type of client is somewhat risk-aversive, slower to make decisions and needs a rational base for decision-making.  He will do his homework to know the prospective purchase thoroughly, ask many questions and need to know the risk-benefit possibilities. Statistics, the record of business success and the methods of tracking progress are highly important.  Heavily impassioned arguments are not convincing – he will want the facts.  He will appreciate your efforts to obtain the additional information he needs. A periodic review of holdings and their status will be expected.  A calm and serious approach will be most appreciated.  If his experience is satisfactory he will tend to stay with the brokerage. He may often indicate dissatisfaction by not responding to questions. Avoid a hard sell approach.  You can feel free to discuss events for which you have sound data. He will not respond to emotional appeals.  Don’t be tempted to talk rapidly, speak slowly and distinctly. Remember to provide him with facts and data but don’t overwhelm him.  Present information in small batches so he can digest them one at a time.  Try to impress him that you are a reliable research resource.



This person is influenced by what his friends and or successful people recommend.  There is more of a desire to be one of the crowds engaging in a popular activity. He will seek a broker who is friendly, indulges in social conversation and to feel his broker empathizes with his experiences when encountering setbacks. He will expect his broker to know him well enough to engage his interests.  It is extremely important for such a client to feel he is doing well – even better than most. Since he will not want to look foolish in his choices, certain fashionable stocks in pioneering activities may offer a strong appeal.  Personal acknowledgment of significant events will be expected.  Depending upon the relationship he will be willing to recommend the broker to others.  Infrequent contact will be taken as a sign of rejection – periodic contact is required even if not associated with a trade transaction.  Be especially careful to avoid criticism – this person will want to save face at all costs.  Compliment him for choices that have been wise.  

Start and close conversations in an optimistic tone (e.g. “a bear market never lasts forever”. Share with him some personal information about yourself – e.g. family and personal interests.


Copyright ©2009 Allan Katcher, Ph.D., Porter Ranch, California  The author acknowledges some valuable contributions from K. Kanai, Business Consultants Incorporated. 


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