The effects of personality and IQ on portfolio outcomes

Finance Research Letters, Volume 51, January 2023


Warwick Business School, University of Warwick, United Kingdom
Lloyds Banking Group, United Kingdom

Received 23 July 2022, Revised 1 November 2022, Accepted 2 November 2022, Available online 4 November 2022, Version of Record 14 November 2022.


We use responses to a self-report survey and matched administrative data to investigate the effects of personality (Big Five traits) and IQ on individuals’ stock trading portfolios. Traits have small but significant effects: openness and extraversion are associated with undesirable outcomes whereas conscientiousness is associated beneficially. Higher IQ is associated with lower trading activity but not enhanced investment performance. We postulate these factors influence outcomes in a complex manner, and exert over long timeframes. With portfolio size held constant, financial literacy has little effect. Other factors, such as customer age, portfolio size and portfolio risk, better explain outcomes.