An OCEAN of personalities to predict financial behaviour

One of the biggest roadblocks to the wider use of personality science to any specific context, like investing, has been collecting data. Getting enough people to fill out lengthy questionnaires is not easy. However, artificial intelligence is moving rapidly to solve the problem. 

Your playlist, and apps, can reveal your personality

Our mobile phones, for example, provide important personality predictors. Your location data is a good predictor of whether you are an extrovert or introvert, simply by revealing what you do on a Friday night. Are you (more often) at home watching Netflix or out and about with friends posting selfies on your social media accounts?

Research is also emerging that shows that our music playlist can reveal the extent of our ‘broadmindedness (also referred to as openness)’, the extent to which we are curious and open to new ideas. A more broadminded person, for example, would have a recent and highly varied playlist versus someone less broadminded with a playlist of older content (a person that’s more traditional). It is even possible to tell this from the apps on your phone. People that have cryptocurrency trading apps, for example, are likely to score more highly on broadmindedness. 

Personality determines your financial behaviour

The Big 5 personality traits include ‘Openness’, as well as ‘Conscientiousness’, ‘Extraversion’, ‘Agreeableness’, and ‘Neuroticism’ (an easy way to remember them is with the acronym ‘OCEAN’). Because the Big 5 personality traits have been shown to be the most consistent predictors of behaviour, large language models (LLMs) are easily trained on the relationship between personality science and financial behaviour. 

For the purposes of this article, I quickly trained what is called a ‘knowledge graph’ using Claude.ai, an AI assistant that is similar to ChatGPT, to search published literature. I wanted it to construct a database to document the relationships between the personality types and financial behaviour, and include the directional correlation to financial behaviours
(i.e. where the relationships are weak and strong).
Claude.ai also generated the infographic included at the end of this article. 

An OCEAN of behaviours

Openness (the extent of curiosity versus traditional values) is linked to financial behaviour in respect of seeking new financial products (like cryptocurrencies) and diversifying across many financial products and markets. There is also a strong positive correlation with risk tolerance (higher openness equals higher risk tolerance). 

Conscientiousness (the extent of impulsivity versus future orientation) is linked to financial behaviour in respect of the ability to delay gratification (preference for the future) that results in higher savings and greater emergency savings. There is a strong negative correlation to risk tolerance (higher conscientiousness equals lower risk tolerance). 

Extraversion (the extent of outgoing and social behaviour) relates to financial behaviour in that these individuals rely on peer recommendations, and tend to spend more on displaying their wealth. 

Agreeableness (the extent of striving for harmony over conflict) relates to financial behaviour in that these individuals prioritise family security and are more likely to prefer responsible or ESG (environmental, social and governance) type of investments. 

Neuroticism (the extent of worry and anxiety) relates to financial behaviour in that these individuals are more likely to regularly check their portfolios and panic sell. 

Personalised communication improves relationships

Because LLMs understand these relationships from published literature (as shown by the generated database), it is also possible for financial advisers to use them to generate hyper-personalised content for their clients where they have collected personality data. These databases carry information on appropriate content in all possible scenarios; therefore, prompting the LLMs to generate this content may easily be automated on certain trigger events. 

Data from Momentum Investments shows that there was a significant increase in behaviour tax for investors earlier this year when President Donald Trump announced his reciprocal tariffs and market volatility spiked. Imagine an LLM linked with a volatility index plugged in that can engage with anxious clients with real-time insights on the behaviour tax being incurred by other clients acting on this short-term market information. The future is here. 

Momentum Investments has a proud heritage and culture of research and innovation and will continue to invest in these initiatives, including our Research Hive. To read more about the behaviour tax in our latest Sci-Fi report or about the Research Hive, visit our website here:

Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.