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BLOG: What’s your motivation for investment?

Kit Klarenberg
Written By:
Kit Klarenberg

There are three main types of amateur investor – as identified by research from The Open University’s True Potential Centre for the Public Understanding of Finance. Which one are you?

If you’ve ever spoken to a financial adviser, you’ll know how important it is to establish your attitude to investing before making financial decisions.

Understanding your motivations and recognising your behaviours will help you make the right choices, seek the right support and achieve the right outcomes. How much time do you spend researching financial products, and monitoring the ones you buy?  Who do you turn to for help? Do you involve professional advisers? And what do you tend to do if your investments fall in value?

The OU’s True Potential Centre carried out research into people’s investment behaviours. We interviewed consumers, financial advisers and stakeholders from the financial services industry. Their responses helped us build a detailed picture of amateur investors, and identify three broad types: delegators, affirmation seekers and DIY investors.


Delegators hand their financial decisions to someone else – typically a professional adviser.

Though they understand the importance of investing, delegators aren’t particularly enthusiastic about personal finance. They may carry out some research themselves, but are unlikely to go into great detail. They tend to review their investments just once or twice a year, and involve their adviser when they do.

Middle of the road Jane is in her 40s, recently widowed and responsible for her teenage children. She describes her investment experience as “middle of the road”, and feels she has a good grasp of the basics. She sees herself as a cautious investor, particularly given her new role as the family breadwinner. Following her husband’s death, her most recent investment was made to ensure she has a future income. As she puts it: “It was a plain and simple necessity”.

Jane bought her investment though an adviser, who carried out the research for her, and recommended the investment she bought. She also sought a second opinion from a family member who works in financial services.

Affirmation seekers

Like delegators, affirmation seekers aren’t finance enthusiasts. But they are generally more engaged and proactive when making investments.

Affirmation seekers are happy to carry out at least some of their own research – but still look for reassurance that they’re choosing the right option for them. So like delegators, they make decisions with the help of a professional adviser, or perhaps a trusted friend or relative – or, in some cases, both.

Taking a bit of a chance Janet and John are a professional couple in their 30s. With a young family, their main priority is their future financial security. They describe themselves as moderately experienced, with a good idea of the financial products available to them.They’re prepared to take some risk with their investments, saying: “We like to push the boundaries a bit. For us, it’s only worthwhile if we take a bit of a chance.”

The couple keep a close eye on their financial situation. They review their investments regularly, carry out plenty of research and take a keen interest in the markets. They’re naturally more drawn to certain investment types – such as property – than bonds, which they see as “boring”.

Their recent investments include a buy-to-let property, for which they consulted a mortgage adviser. John has also talked to a pensions expert about putting his pension pot into higher-risk funds for a better return. He’s considering a career change, which would probably involve a fall in household income in the short term.

DIY investors

DIY investors have different motivations to delegators or affirmation seekers: they’re intrinsically interested in finance. Some have a genuine enthusiasm for personal finance; others enjoy investing in a certain area – for example, property or the stock market.

As such, they conduct in-depth research, and are likely to consult a number of sources before coming to their own decisions. They actively monitor their investments, and make changes along the way if they’re not happy with the performance of their products.

Of course, there’s no guarantee that a DIY investor will have better expertise or judgement than a delegator or affirmation seeker, or will achieve better outcomes. They may simply be more confident – possibly too confident – about their ability to make their own investment decisions. And unlike those who buy investments from a financial adviser, DIY-ers have no redress for poor investment decisions.

Deciding to dabble James is a single professional in his late 20s. Having previously saved in cash ISAs, he “decided to dabble in the stock market”. He was influenced by his former boss, who “used to go on about his investments, and how much money he’d made.”James opted for a self-select stocks and shares ISA. He wanted to be able to choose where his money was invested, and to regularly buy and sell shares. He did his own research, choosing a provider with no annual fee.

Despite his DIY approach, he sees himself as a low-risk investor: “I generally stick to UK-based, FTSE-listed businesses,” he explains. “I’ve dipped into the AIM now and then, but 70-80% of my investments are very low risk.”

James monitors his investments two to three times a week. He also checks the financial papers and specialist websites each day. He enjoys the process, saying, “I get excited when I read something significant in the news, or when something new comes up.”

What kind of investor are you?

By looking at each type of investor in turn, you can see which most closely resembles your own behaviours and motivations.

Are you prepared to spend a fair amount of your own time researching investment options? Do you feel confident about making your own decisions? Do you get excited about checking the markets? Do you enjoy actively managing your investments? If so, then like James, you’re probably a DIY investor.

Maybe you enjoy doing the legwork and tracking your investments, but need a second opinion before signing on the dotted line. In which case, you’re more likely to be an affirmation seeker, like Janet and John.

Or you might prefer to invest and forget – at least for six or twelve months. You may find the very thought of investing a chore, or too much to deal with. That generally means you’re a delegator, much like Jane.

On the spectrum

When it comes to investor types, context is everything. An individual may move from being a delegator to an affirmation seeker or a DIY investor at different stages of life, or depending on the particular circumstances surrounding an investment decision. Knowing where you are on the spectrum as you approach each investment will help you to understand your motivations and behaviours – and achieve your investment objectives.

But remember: in a potentially complex situation (such as a divorce); when large sums of money are involved; if you’re considering taking a bit more risk than usual; or if you’re just not sure – then it’s probably best to seek professional advice.