Tuesday, October 12, 2021

Conscientiousness could be the "wealth trait"; these industious individuals—demonstrating a steady, plodding behavior pattern—appear to build higher net worth by using other skills to convert their higher incomes into net worth

O.C.E.A.N.: How Does Personality Predict Financial Success? Jim Exley et al. Journal of Financial Planning. Oct 2021. https://www.financialplanningassociation.org/article/journal/OCT21-ocean-how-does-personality-predict-financial-success

Executive Summary

Purpose: Research across fields suggests that the Big Five personality traits (O.C.E.A.N.) predict individual behaviors including various financial outcomes. However, O.C.E.A.N. as a measuring tool has not caught on in the academic or applied financial planning field as extensively as it has in other disciplines. The purpose of this paper is to be the first to examine the relationship between the Big Five personality traits (O.C.E.A.N.) and four regularly collected financial outcomes—financial literacy, financial risk tolerance, income, and net worth—using a single data set. The correlational format shows the potential predictive ability of personality on various financial behaviors that is succinct and easy to understand.

Hypothesis: The research hypothesis is that O.C.E.A.N is a significant predictor of financial outcomes. Specifically, 14 out of a possible 20 correlations between O.C.E.A.N. and financial literacy, financial risk tolerance, income, and net worth will be significant.

Methods: Personality, financial literacy, income, and net worth were collected using a significantly powered current MTurk sample (n=412) representing the U.S. population. Correlations and OLS regressions were run controlling for age, gender, and education to test the relationship between the variables.

Findings: 16 out of a possible 20 correlations between O.C.E.A.N. and financial literacy, financial risk tolerance, income, and net worth were significant, though some were different than hypothesized. Specifically, this study was the first to find that extraversion correlated positively with financial risk-taking and income but negatively with financial literacy. There was no significant relationship with net worth. Conscientiousness correlated positively with financial literacy, income, and net worth, but negatively with financial risk tolerance. Neuroticism correlated negatively with financial literacy, income, and net worth. These findings contribute to the financial planning field by demonstrating that O.C.E.A.N. can be simply and systematically collected from individuals—much like risk tolerance—which adds insight into specific financial behaviors.

Possible Research Directions: Much like the systematic adoption of risk tolerance, the academic field of financial planning can be advanced by collecting robust personality data using the O.C.E.A.N. framework. This will allow for the generalization of findings from other fields over to financial planning. To assist researchers, the University of Michigan should consider adding robust measures of financial risk tolerance and personality to its valuable Health and Retirement Study. In addition, practicing financial professionals should consider collecting O.C.E.A.N. data on clients to gain additional insights into clients’ behaviors over and above standalone risk tolerance.


This study sought to elucidate how the Big Five personality traits may play a role in describing household outcomes related to (1) financial literacy, (2) financial risk tolerance, (3) income, and (4) net worth. Eleven of the 14 hypotheses were supported and 16 of the 20 correlations were significant. OLS regressions and correlations tell a similar story. With regression, these associations are smaller and less stable because age, gender, and education have well-established relationships with aspects of O.C.E.A.N. By controlling for these covariates, we remove meaningful variance attributable to the personality metrics of interest. Acknowledging that these relationships will be weaker as less variance is available to explain, the discussion will focus on the bivariate correlations.

Financial Literacy. It was hypothesized that financial literacy would be positively correlated with openness and conscientiousness and negatively correlated with neuroticism. Each of these hypotheses was supported. When assisting individuals high in C and O, planners may see higher financial aptitudes. Open individuals likely value financial information as a way of continuous learning and have gathered knowledge along their financial journey. Conscientious individuals have likely also gathered financial knowledge possibly through study and determination to master the process. High Os and Cs may benefit from more detailed explanations of advanced topics involving their investing and planning. This advanced learning should allow high Os and Cs to grasp more complex strategies that may assist in reaching their goals. In addition, these individuals will likely appreciate a detailed discussion of the inner workings of various strategies, even if they decide against implementation.

Though neuroticism was negatively correlated with financial literacy, extraversion had a similar negative relationship. When assisting individuals with high E and high N, planners may see lower financial aptitudes. While high Ns may readily admit this shortcoming, high Es may deny low financial literacy as high Es can be prone to overconfidence (Schaefer, Williams, Goodie, and Campbell 2004). Planners assisting high Es and Ns should consider creative ways to spend time on basic financial literacy in review meetings rather than assigning self-learning tasks these individuals may not value or complete.

Financial Risk-Taking. For financial risk-taking, as hypothesized, extraversion had a significant positive relationship with risk tolerance while conscientiousness and agreeableness had significant negative relationships with risk tolerance. In a surprise finding of this sample, openness also had a significant negative relationship with risk-taking. Neuroticism did not have a significant relationship with an individual’s appetite for financial risk-taking. In the current climate, extroverts may pose a unique challenge. When assisting individuals with high E, planners should be mindful that big, extroverted personalities tend to add risk even when it may be detrimental to their long-term goals. Spending extra time evaluating and understanding high Es’ risk tolerance over and above industry protocol should be beneficial with these clients. Extroverts are often concerned with appearance and status (Naumann, Vazire, Rentfrow, and Gosling 2009). High Es may also be at higher risk for “Gambler’s Ruin” (Huygens 1657; Campbell, Goodie, and Foster 2004). A “sandbox strategy” or “trading account” consisting of a small set of risky assets that are fun to discuss at cocktail parties may scratch the risk itch, while not endangering the entire financial plan.

Planners may spend extra time understanding and assisting high Cs and As with their risk tolerance in an attempt to nudge them into riskier assets if needed to accomplish their long-term goals. Planners may consider more detailed explanations of the costs and benefits of risk, appealing to high Cs’ and As’ higher financial literacy.

Income. As hypothesized, income had a positive relationship with conscientiousness and extraversion, and a negative relationship with neuroticism. Financial industry compensation structures incent planning professionals to pursue larger accounts. In search of larger clients with higher incomes, planners may be unknowingly selecting individuals with high C and high E and deselecting individuals with high N. Planners could personally benefit from familiarizing themselves with the unique behavioral patterns of high Cs and high Es and tailoring their communication and recommendations to the individual. For example, knowing a high-income earner is high in conscientiousness should encourage planners to use education and discipline strategies—such as budgeting tools—often appreciated by high Cs. However, high-income Es may not value the extra education and may benefit more from automated strategies that systematically increase discipline—thus lowering risk—such as the automatic enrollment and asset allocation features that are included in various financial tools such as 401(k) plans.

Individuals high in neuroticism face a tall hill to climb. However, planners should be well equipped. Michael Kitces found in his 2018 annual survey of financial advisers that successful advisers often have lower N scores—meaning quality advisers often come with a high dose of emotional stability. With lower incomes, high Ns will need help embracing other paths to wealth building such as financial literacy, discipline, and risk-taking. However, individuals with lower incomes have been shown to have lower financial literacy and less access to financial institutions (Zhan, Anderson, and Scott 2006). High Ns may have the highest need for financial advice without the means to pay. This is an area where financial services might need to consider skills and tools developed in the counseling and mental health fields to better serve high-neuroticism clients. Understanding personality traits may provide clues as to the mechanisms individuals are employing to earn higher incomes that may or may not be beneficial to their long-term goals.

Net Worth. As hypothesized, conscientiousness had a positive relationship with net worth while neuroticism had a significant negative relationship. Extraversion was not found to have a significant relationship with net worth despite the finding that extroverts earn more. These findings, along with other studies (Duckworth et al. 2012), could lead to conscientiousness being considered the “wealth trait.” These industrious individuals—demonstrating a steady, plodding behavior pattern—appear to build higher net worth by using other skills to convert their higher incomes into net worth. Despite also earning higher incomes, high Es did not convert their higher income into higher net worth for this sample. Individuals high in neuroticism had significantly lower net worth, which is not surprising given lower incomes and lower financial literacy.

In total, 11 of the 14 O.C.E.A.N. personality trait hypotheses were supported. In addition, 16 out of a possible 20 personality–financial-outcome relationships were significant, though—as mentioned—a few were unexpected or in the opposite direction of the hypothesis. Clearly, the Big Five personality traits meaningfully predict a range of important household financial outcomes.


This study has several implications for researchers and those working in the financial services profession. For those in academia and the emerging field of wealth science, this study documents the associations among the Big Five personality traits and four household financial characteristics. Few studies have used net worth as a dependent variable in relation to personality modeling (Duckworth et al. 2012; Nabeshima and Seay 2015). Most personality research related to household finance topics has focused on income as the dependent variable. In The Millionaire Next Door, Stanley and Danko (1996) found that wealthier individuals tend to focus more heavily on measuring their net worth than lower net worth individuals, suggesting conscientiousness. However, few academic studies have followed up on this finding. Hopefully, this study inspires future studies using Big Five and net worth measures. Additionally, results from this study provide support for the model of risk-taking proposed by Irwin (1993).

From an applied standpoint, this study widens the pathway into furthering financial psychological research and expands the tools available to investors and financial service professionals as they attempt to grow wealth. Coaching and education—taking into account their unique O.C.E.A.N. profile—may provide additive benefits over and above standalone financial risk profiles. For example, high Cs may need assistance with adding risky assets to their portfolios, while high Es may need assistance in reducing financial risk and increasing their financial literacy.

Future Research

This study focused on the trait portion of personality. Traits describe a stable pattern of behavior, motivation, emotion, and cognition that can be observed in any sociocultural context (DeYoung 2011). However, individuals possess traits in a package (sometimes referred to as a personality “profile”), not standalone. Exploring repeating patterns of O.C.E.A.N. traits and financial outcomes could prove especially interesting. Secondly, much valuable research in the area of finance and personality is conducted using the University of Michigan’s Health and Retirement Study (e.g., Duckworth et al. 2012; Nabeshima and Seay 2015). Adding a more robust measure of financial risk tolerance and Big Five personality to this survey could potentially open the floodgates for financial personality research. Finally, the McAdams model of personality also includes characteristic adaptations and integrative life stories. Using the McAdams model as a guiding framework, future research that combines traits, experiences, and life stories should provide additional insight into repeatable patterns of financial behavior.


The study has several limitations. First, it is important to replicate this pattern of findings in a larger sample to test their generalization. While the present self-reported MTurk sample had sufficient size to establish stable associations, ideally this study would have used the much larger Health and Retirement Study (HRS) that verifies financial data. Ideally, direct measures of net worth and income based on bank records, spouse reports, or other assessment approaches would be used. However, the purpose of this study was to use a robust measure of personality and risk tolerance not included in the HRS. While MTurk has been validated as a sampling tool, studies have shown that results can differ from the general population (Arditte, Cek, Shaw, and Timpano 2016). To test predictive validity, a larger sample representative of investors, a larger and more refined set of control variables, and multiple indicators of outcome variables would be ideal. Second, this study assessed a single point in time. It would be beneficial to have longitudinal data that establish perhaps a more direct or active role of personality in financial decision-making. For example, changes in conscientiousness at time one may lead to increased net worth at a later time. This would be particularly important to establish over market cycles.

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