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Know thyself.

That's the message Will Prest wants to send to investors who are saving for retirement. Prest, senior retirement strategist at Transamerica, says self-awareness is a critical tool in retirement planning. "If you really want to manage your investments well, you need to understand your personality," says Prest. "It's always valuable to know who you are."

That's because investors need to understand why they make certain investment decisions, from asset allocation strategies to how they deal with sharp market downturns. After all, knowing why you make those decisions may help you avoid costly missteps as you march toward retirement, according to Prest.

So what kind of investor are you? After studying more than 2,000 survey responses from pre-retirees in their 50s, 60s and 70s, Transamerica recently grouped investors into four personality categories based on how change, uncertainty, risk and expectations influenced their retirement planning. A short


will help determine your "change personality" and group you in one of the following categories:


Prest says venturers believe life is within their control, "seek out change" and perform best when confronted by a period of transition, whether a job change or adding a new baby to the family. Venturers feel prepared for retirement and are optimistic that the transition into retirement will be easy. They embrace the do-it-yourself ethic and often take control of their investments. But while this bunch has confidence to spare, Prest also says venturers' personalities can get them into trouble. "They run the risk of being too self-confident and walking into something they aren't prepared for," he says.


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Like venturers, adapters believe life is within their control and are confident about their transition into retirement. But these investors also are less willing to embrace risky investments, with nearly half saying they're not comfortable taking chances with their savings. What's more, roughly half reported that change causes anxiety. "They're called adapters because they're good at changing when asked to change, but they don't seek change," says Prest.


This group wants to keep the status quo. Anchored investors don't find change exciting. In fact, says Prest, the current financial crisis is a source of great anxiety for this group. "All they want to do is keep things the same," he says. "Their stress levels go through the roof when things change." But Prest notes that while these investors have mixed feelings about their transition into retirement, they're also the most likely to have developed and stuck with a solid retirement plan, generally a better strategy than flip-flopping from one plan to another.


Pursuers feel the least prepared for retirement of the four personalities, and aren't sure that outside help from an adviser or planner will help them reach their goals. Roughly two-thirds of pursuers believe life changes are outside of their control, according to the Transamerica survey. As a result, this group craves change and struggles to stick to one investing strategy. That hunt for something new is bad news when it comes to developing a solid retirement plan, according to Prest. "What pursuers need to do is work with an adviser, establish a game plan and stick to it," says Prest.

So once you've determined your "change personality," what's the next step? According to Prest, it's a little bit of reflection. Think about how you approach investment decisions, and what impact those decisions will have on your retirement planning. It's unlikely, for example, that a pursuer will do an about face and start taking more control over his investments, as his venturer friends do. But knowing your tendencies can help avoid chasing that sure-thing stock tip on



Prest recommends investors build a well-diversified and well-allocated retirement savings plan. Such a plan may feel uncomfortable for some individuals. Anchored investors who can't stand the risk of losing money, for example, will likely bristle at adding stocks to their portfolio. But an anchored investor needs to balance the important role stocks play in a retirement planning strategy with her own emotions.

Understanding what kind of investor you are, says Prest, can help you reconcile, and balance, those competing feelings. "Sometimes just knowing who you are can allow you to breathe a sigh of relief," he says. "You know it's just how you're wired."