How Folio AI scores your behavior.
Folio AI is a behavioral profiling tool — not a portfolio recommendation engine. What you actually do under stress predicts your investing outcomes far better than what you say you'll do. Here is exactly how we measure that, and the research behind every assumption.
Revealed behavior is weighted 70%. Stated intent is weighted 30%.
How you describe your risk tolerance, horizon, and goals when asked directly. Useful context — but easy to over-state in a calm office or comfortable browser tab.
What you actually did in past drawdowns, how often you check your account, your real concentration, your real liquidity buffer, and your historical reactions to FOMO triggers and loss spikes.
The result is a behavioral score between 0 and 100, mapped to a behavioral investor type — for example Steady Builder, Reactive Seller, Opportunistic Buyer, or Conservative Protector. The type is the product. Illustrative investments are one output of knowing your type.
What we measure — and what we don't.
- · Past behavior under realized drawdowns (panic-sold, held, bought the dip)
- · Check-frequency — a proxy for anxiety and overtrading risk
- · Single-position concentration as % of investable net worth
- · Months of liquidity buffer outside the portfolio
- · FOMO sensitivity — reactions to trending tickers
- · Tolerance for high-volatility sleeves (crypto, small-cap, commodities)
- · Use of leverage, margin or options (advanced tier)
- · Stated horizon, life stage and primary financial goal
- · Your legal name
- · Social Security or national ID numbers
- · Bank credentials, brokerage logins or account numbers
- · Direct access to any account or holdings
- · Anything you do not voluntarily type into the interview
Why revealed behavior beats stated intent — the research.
Dalbar QAIB Study
1994 – presentThree decades of Dalbar's annual study consistently show the average US equity-fund investor materially underperforms the very funds they hold — often by 3–4 percentage points per year — almost entirely because of behaviorally-driven entries and exits. The gap is not the market's fault. It is the gap between stated long-term intent and revealed short-term reaction. This is the single most cited piece of evidence that behavior, not allocation, drives realized investor returns.
Kahneman & Tversky — Prospect Theory
1979, EconometricaThe Nobel-winning work behind behavioral economics. Investors feel the pain of a loss roughly twice as acutely as the joy of an equivalent gain. This explains why drawdown tolerance is asymmetric, why stated 'growth appetite' collapses under real losses, and why a 30% drop triggers selling even from investors who said they would 'hold through anything'.
FINRA Investor Education Foundation
National Financial Capability Study, ongoingFINRA's repeated, nationally-representative surveys find that self-reported risk tolerance correlates poorly with actual investment decisions, retirement adequacy, and behavior during volatility. The Foundation explicitly recommends supplementing stated-tolerance questionnaires with behavioral and experiential measures — exactly what the 70/30 weighting does.
The 30% Rule
Synthesized from Dalbar + crash dataStandard risk questionnaires predict an average ~15% drawdown tolerance. Realized investor behavior in the 2008 Global Financial Crisis (S&P 500 -57% peak-to-trough) and the 2020 COVID flash crash (S&P 500 -34% in 33 days) shows that crossing roughly the 30% threshold triggers de-risking action in about 70% of retail investors — regardless of what they told their advisor on a calm day.
What you actually get.
A behavioral investor type — your archetype, your score, your traits, and the gap between how you describe yourself and how you actually behave. This is the product.
Illustrative investments — the tickers shown on the results page — are examples of what that profile typically looks like in practice, not personalized financial recommendations. They are one output of knowing your type, alongside your downloadable behavioral profile, the What-If Explorer, and the live deep-dive refinement.
Folio AI is a behavioral profiling tool. The investments shown are illustrative examples based on your behavioral profile — not personalized financial recommendations. Always consult a licensed financial advisor before making investment decisions.