In Canada, financial advisors and dealers are required by provincial securities commissions and self-regulatory organizations---charged with direct regulation over investment dealers and mutual fund dealers---to respectively collect and maintain know your client (KYC) information, such as their age or risk tolerance, for investor accounts. With this information, investors, under their advisor's guidance, make decisions on their investments that are presumed to be beneficial to their investment goals. Our unique dataset is provided by a financial investment dealer with over 50,000 accounts for over 23,000 clients covering the period from January 1st to August 12th 2019. We use a modified behavioral finance recency, frequency, monetary model for engineering features that quantify investor behaviours, and (unsupervised) machine learning clustering algorithms to find groups of investors that behave similarly. We show that the KYC information---such as gender, residence region, and marital status---does not explain client behaviours, whereas eight variables for trade and transaction frequency and volume are most informative. Hence, our results should encourage financial regulators and advisors to use more advanced metrics to better understand and predict investor behaviours.

This is joint work with John Thompson, Longlong Feng, and Adam Metzler of Wilfrid Laurier University and Chuck Grace of the Richard Ivey School of Business, Western University.

Bio: Mark Reesor earned his Master's and PhD degree in Statistics from the University of Waterloo. After earning his doctorate Mark worked as an analyst in the Financial Markets Department at the Bank of Canada. From 2002 until 2016, Dr. Reesor was a faculty member at Western University in the Departments of Statistics and Actuarial Science and of Applied Mathematics and in the finance area at the Richard Ivey School of Business. Since 2016, he has been in the Math Department at Wilfrid Laurier University. Dr. Reesor has a varied research program including works in personal finance, corporate finance, financial stability, securities class actions, risk management, derivatives, and Monte Carlo Methods. In addition, Mark was a founding member of the Committee to Establish the National Institute of Finance, helping to create of the U.S. Office of Financial Research.