A psychologist has developed one more tool for helping defined contribution plan participants to understand their own investment comfort levels and to put that knowledge to work in making asset allocation decisions.
Kathleen Gurney, chairman of Financial Psychology Corp., Sonoma, Calif., developed the Moneymax Profiling System, a 28-question worksheet that identifies an individual's attitude toward money and risk tolerance and places that person in one of nine distinct money personality categories.
Ms. Gurney said many systems used to profile a participant's risk tolerance and investment knowledge assume a certain level of knowledge - such as what an equity or a bond is. "Many individual employees aren't even that sophisticated," she said.
"Employees need a point of reference to start from before they can make even simple investment decisions about retirement savings. ... The Moneymax profile system gives them a sense of who they are as an investor and what kinds of risk and volatility they'll tolerate. The profiling system is the platform for further education and training. Knowing what kind of investor you are makes the rest of the decisions easier."
Ms. Gurney developed the Moneymax profile system while training factory workers about investment management.
Bankers Trust Co., New York, incorporated Moneymax into its Financial Mentor program for 401(k) clients. Financial planners also use it.
