Is this test easy to take?
Yes. It takes 16 minutes to complete, and you take it on this website. The Test Report gives three percents: Normal Conditions, Stress Conditions, and the Average.
Ted’s and Doris’ Coping Strength And Risk Tolerance (CART) Profiles
Do spouses have the same CART Profile?
They can but usually they do not. Ted and Doris have very different CART Profiles.
For High Risk: Ted’s is 50%. Doris is 0%.
Low Risk: Ted’s is 0%. Doris is 50%.
Now they see how big the difference is.
Uh oh. How do they resolve this conflict?
Look at column 4. They can “Invest the Average” or select investments that work for both of them. If they have a financial planner: The three of them use both CART Profiles to build – or revise their portfolio.
I understand High, Medium, and Low Risk. What is Balanced Risk?
Balanced Risk is that set of Coping Strengths in which Ted and Doris show Agreement on how to invest money.
A family can use a part of the money in Balanced Risk for a child’s college fund. Parents can tell their child, “This money is for your college!”
Why would they tell their child this? To teach a child how to invest. How?
1. Parents and their financial planner discuss investments with their child.
2. Then child selects an investment based on what s/he has learned. Now s/he has an active role in getting the most money for college.
3. Over time s/he will see how to make increasingly wiser choices. For instance a young child might select Disney.
4. After watching what Disney does s/he might buy another stock. And ask, “How well is this stock doing when compared to Disney?”
What advantages does knowing our SORT CART Profile give?
These subjects (and perhaps others) can influence our risk tolerance. The SORT Test’s 40 questions gives the investor’s brain 40 times to look at which subjects actually do influence his/her risk tolerance – and select the answers.
1. Age
2. Socio-economic level
3. Learned family patterns about how to address money
4. Level of education
5. Choice of profession
6. Number of years working
7. Investments that have done well
8. Information from family, neighbors, and friends
9. Funds they need for family members
10. Funds they need for retirement
When a financial planner offers The SORT Test to clients: Clients see that s/he cared enough to give a valid and reliable test to learn what percent of investments they want in High, Medium,
Low, and Balanced Risk in Normal AND Stress Conditions – their SORT CART Profile.
This Profile allows them to make better portfolio decisions quicker.
How does a person get the unique SORT Profile that s/he has?
We see successful people, learn what they do, and copy what works for them. Before we are six years old the brain does not have the ability to judge, “Is what I see true? Does it work? Is this good or bad?” So we can ONLY accept what we hear as “the way life is” – unconditionally.
Our parents are our first teachers. They developed coping strengths, selected a profession that gave them the amount of money they need with the amount of risk that they can take, and made a living. We learned their coping strengths even when neither we or they realized we were doing that.
We are very fortunate if we have parents who have coping strengths that work – we already have them. The Good News: When we see coping strengths that do not work we can learn coping strengths that do work from successful people. We can choose to add their coping strengths to our set – when we know our CART Profiles.
How did Ted get his CART Profile?
Ted had one small business, got an MBA, and grew it into a business empire. He used the coping strengths that his parents taught him.
He tells us, “I grew up on a farm, and I am very thankful for what it taught me. That is where I learned how to take charge. We planted crops and harvested them. Bought cattle, milked the cows, and sold the milk. If something broke I figured out why it broke and how to fix it. I had to trust in God to give us rain and sunshine.
I was the oldest kid. My mom and dad counted on me to figure out everything. Then teach the other kids what I knew. I learned how to run a business. I see that I can count on myself to take responsibility for what must be done and then get it done. So then I could leave the farm and run a business somewhere else, too. I love what I do! Of course I am good at it! How could I not be?”
How did Doris get her CART Profile?
She tells us, “I really enjoyed my childhood. My dad was a CPA. He spent a lot of time with me. Taught me how to solve a problem. I ask what caused it, consider a number of solution options, research each option, analyze the information I get from my research, reduce my solution options to five, select one option, and carry out that option.
My mom was teacher until she and dad had my brother and me. She, my brother, and I had so much fun. When we were both in school she went back to teaching. But she was home when we got home from school. Ted and I have two children, and I stayed home with them until they went to school, and then I went back to teaching. I am a happy camper.”
What else can be fundamental in forming a CART Profile?
Family expectations make their impact, too. This is why we see entire families of engineers, cops, lawyers, and doctors, etc. throughout generations. So if a person does not join “what we Smiths do” it is important to everyone to know why.
When s/he has to reach a goal this is the CART Profile s/he goes for. Depends on. Trusts. S/he keeps going back to it. It works for him/her.
What can happen when Ted, Doris, and the financial planner look at their CART Profiles together?
It can lead the financial planner can ask, “Is that how you got to be so successful? I’d love to know about that.”
Now the financial planner gets life stories of how the client succeeds – a great way to get to know the client better. We are all the heroes of our own life drama. We love to tell our success stories.
Can the CART Profile indicate what an investor is likely to do in a Bear Market?
Yes.
If Tom’s CART Profile shows that he wants to have 50% in High Risk investments in Normal Conditions 50% in High Risk investments in Stress Conditions.
Tom sees a Bear Market as a chance to buy stocks cheap. And does.
Ted’s CART Profile shows that he wants to have 50% in High Risk investments in Normal Conditions. 0% in High Risk investments in Stress Conditions
Ted wonders what he was thinking and is upset.
Can the CART Profile indicate when an investor might Panic and Sell.
Yes. In Stress Conditions Ted is at risk to Panic-and-Sell.
How else will it help the investor to know the CART Profile?
S/he can strategize how to use the CART Profile at work and in other roles – spouse, parent, grandparent, and child to an aging parent.
How can a counselor in private practice write a questionnaire that gives a client’s CART Profile before a financial planner does?
Because the client and counselor do not have a CHOICE. They must know the client’s coping strengths (CART Profile) BEFORE they use the strengths to reach WHATEVER goal the client sets.
A financial planner must know an enormous amount of information about a wide range of investments as well as know the client.
How can any person have time to learn investments AND learn enough psychology to write a questionnaire that shows the percent of investments that an investor wants to have in High, Medium, Low, and Balanced Risk in Normal and Stress Conditions?
Take Aways: Advantages the SORT Test© Creates
1. Your CART Profile shows the strategies that you use to manage your life including your risk tolerance. By knowing your CART and your partner’s CART you can arrive at a harmonious investment strategy.
2. Your CART Profile shows what percent of your portfolio you want to have in
High Risk, Medium Risk, Low Risk, and Balanced Risk – in Normal Conditions.
High Risk, Medium Risk, Low Risk, and Balanced Risk – in Stress Conditions
IMPORTANT: There can be as much as 50% difference between stocks that you want to have in Normal Conditions and Stress Conditions.
3. Balanced Risk is the percent of the portfolio that partners show agreement in what investments to select.
4. Parents and their financial planner can teach a child about investments. Then a child can select an investment. As s/he gains wisdom s/he can select another investment to increase the money in his/her college fund.
5. Now the child matures as an investor as s/he matures in every other area of life.
HERE’S A THOUGHT: What can happen if both spouses and the financial planner take the SORT Test©? Then the financial planner will know what CART Profile glasses s/he sees all clients through.
In the picture to the right you see people from many different professions. Each one’s CART profile led him/her to select the profession s/he has — whether or not s/he realizes that.
Next you see a sample SORT Test© Report, one for Couple 1 whose CARTs are very different, and Couple 2 whose CARTs are identical.
