Unlocking the Power of Personality in Investing: A Conversation with Positivly’s Iain Gillespie
Positivly is combining the principles of positive psychology with modern wealth management to create stronger connections between people, their advisors, and their wealth. It’s a concept that co-founder and CPO Iain Gillespie has been working on for years, combining the science of positive psychology with data analytics to better understand not only what investors are interested in, but why. Below he explains the technology behind the world’s first financial personality test and what it can mean for the future of investing.
From law school, to finance to Positivly… is that right?
Iain Gillespie: That’s right. My whole life I’ve been gradually figuring out more and more about where I actually fit. It’s true, the first thing I did was I got a law degree, but I realized very early on I’d be a terrible lawyer. So, I jumped ship almost immediately and luckily stumbled into an investment company called Aberdeen Standard Investments and I worked for them for about eight years doing different distribution and corporate development roles. Then I moved out to the U.S. about six years ago.
The bulk of my time with Aberdeen was spent buying companies to try and solve problems for asset managers, and the main problem we were always trying to solve was distribution. How do you get your investment products into the hands of investors? How do you remove all the barriers and get closer to the customer?
Through that process, I started to think about ways that you could solve this problem through technology. But being an ex-lawyer who had stumbled into an investments career, I had no idea how to actually turn these ideas into reality, so I signed up for a coding bootcamp, the kind of school that takes you from zero to a developer in six months. Through that I was able to build prototypes for some of my ideas, and one of them eventually became Positivly.
Was distribution the only problem you wanted to solve?
IG: Actually, no. The two big evolving trends that everyone was talking about at the time were thematic investing and ESG. Those were the growth areas, but no one was talking about why they were growth areas. The reason was and is because people want to get closer to their investments. They want their investments to reflect who they are, whether it be their values or how they see the future unfolding. And the industry was responding to that the way that most industries do when they don’t have a clue what they’re doing, just like churning out products.
Suddenly there was a massive proliferation of thematic and ESG products, but I really wanted to take a step back and understand why people were buying these types of products in the first place. Where’s the demand coming from?
It’s ultimately based on psychology and what motivates people. They don’t want to look at their portfolio and just see tickers and jargon that they don’t understand. They want to see themselves as a person reflected in their portfolio.
How does that inform what Positivly is building?
IG: We’re taking the trends and the demand that we’re seeing in the market and turning them into a personalized science for individual investors. That’s how this concept of the world’s first financial personality test was born. It’s really all grounded in positive psychology.
The industry right now is taking what’s called an avoidance-based approach to everything. It’s all about risk, solely focused on “how much can you stomach?” “What’s your worst case scenario as an investor?”
Whereas, if you take a more positive approach those questions turn into “where do you want to be?” and “what do you want to accomplish?”
Is personality the future of investing?
IG: I think so. We see it in other industries. This whole notion of personalization is not new, it’s just new to investing. There’s a company called Care/of that sends out personalized vitamins. You go through and take a questionnaire, some personality tests, and fill out some other information and they send you a tailored, personalized multivitamin regimen based on who you are and what health goals you’re trying to achieve. It’s the same thing with Stitch Fix; you tell us a bit about yourself and we’ll learn about your style through what you select and send you clothes automatically.
These notions of personalization are creeping in across all industries, I just think the investment industry has been shockingly bad at it. And it’s because our whole industry is focused on risk. What we’re really looking to do with Positivly is flip the whole model on its head and, with the understanding that obviously risk is important, find new ways of engaging with customers and building something that’s personalized to them and feels more connected. That’s the holy grail that investors are looking for.
Has heading up product with a non-technical background made a difference in your approach to Positivly?
IG: It has, because it’s allowed me to focus solely on the customer. The best product people understand the customer first, the market they’re in second, and then the design of the product itself third. Then of course they know how to talk to those people who can build it.
Usually the most technical people don’t build the best products because they don’t have client empathy. They aren’t looking past the product. That’s why it’s really important to empathize with and understand the client, and that’s a unique challenge for finance in particular. The empathy gap in this industry is huge because the model traditionally was a black box. Customers and investors didn’t need to know how the sausage was being made.
But technology is democratizing access to finance. Companies like Betterment and Wealthfront took the first step, opening up access to investment advice, but that only streamlined an existing process. The next level is what we’re working on at Positivly, using technology to bring investors into the process at a deeper, more personal level.