Financial Risk tolerance is an important concept for a financial planner to recommend financial products. As the baby boom generation approaches retirement, research to determine how these individuals perceive financial risk tolerance has grown exponentially. The present study tries to determine the relationship between financial risk tolerance and some personality traits, such as sensation-seeking, locus of control of the baby boomers. It finds that a baby boomer with an external locus of control would be more risk-averse and a person who is a sensation seeker has significantly higher risk tolerance than one who is not a sensation seeker. Meanwhile, gender and race do not mediate the associations among risk tolerance and locus of control and sensation seeking.
Author(s): Abed G. Rabbani, Zheying Yao, John E. Grable
