WHY SHOULD INVESTMENT CONSULTANTS ASSESS RISK TOLERANCE PROPERLY?

There are common problems faced by Investment Consultants and Investors.

Story 1: Ahmad has no reason to go back to his clients other than trying to make another sale.
Even after working for 10 years in the financial services industry, every Monday morning Ahmad has to start afresh wondering where he will find new clients. What he has been doing all these years has been transactional selling the current 'hot' investment. He has no strategy in place to retain clients.

Do you think that Ahmad could do better?
Do you think that Ahmad's clients are satisfied?

Story 2: Mei Ling can't meet her sales targets.
Mei Ling is a very hardworking Investment Consultant but worries that she may not be able to meet the goals set by her company. She has some loyal clients but has difficulty attracting new clients.

If you are in Mei Ling's position, would you consider changing job?
If you are in Mei Ling's position, would you be interested in an easy way to solve the problem?

Story 3: Kumar can't sleep at night.
Kumar has a five year old daughter and wants to provide her with an overseas higher education. Kumar invested a major part of his savings into a high risk financial product which promised high return which he did not really understand. Now he has difficulty sleeping at night and becomes easily anxious seeing the wide variations in the value of his investment. He only has one issue for his investment- possible performance.

If you are in Kumar's position, would you want to go through these traumas?
If you are Kumar's Investment Consultant, what would you recommend Kumar to do now?
If you are in Kumar's position, would you blame your Investment Consultant for not properly informing you about the risk involved in the investment?

FinaMetrica helps solve these problems for Investment Consultants and their clients by providing a consistent framework for both initial and ongoing investment advice. FinaMetrica's focus is on the psychological factors relevant to financial decision-making in terms that are meaningful to individuals and their advisers. It assists in:

Uncovering client's individual needs.
Providing a reasonable basis for investments recommendations.
Increasing clients understanding of the key trade-offs in investing: Risk Tolerance and Risk Required.

Traditional Risk Profiling Tools Simply Do Not Do the Job

Traditional risk profiling tools

Rarely assess risk tolerance accurately as they are not valid, accurate nor reliable.
Often conflate factors other than risk tolerance such as time horizon and risk capacity in their report.
Simplistically link scores to investments.

Consequently the right recommendation will be a matter of luck rather than an objective assessment. Of course this need not be the case, as there is a better alternative.

FinaMetrica provides a scientifically validated technique for assessing financial risk tolerance and an easily understood methodology for incorporating the assessment into the financial planning process.

Specifically, FinaMetrica provides an 'apple-to-apple' comparison between risk tolerance and investment risk, enabling you to help your client make properly informed risk/return trade-off decisions, because the elements are separate, understandable and comparable.

Download FinaMetrica Brochure for a brief overview.

Protecting Investors.

Investors often do not know what investment best meets their needs. This process is further complicated when they do not understand their own risk tolerance. Ignorance causes fear and fear leads to uncertainty.

FinaMetrica provides a detailed and highly personalised risk tolerance report addressing the investor's financial attitudes, values and preferences.

Protecting the Investment Consultants.

The process of personal financial planning invariably involves helping clients manage one or more conflicting alternatives through trade-off decisions that best meet their present and future needs and wants in their current and anticipated circumstances. Effective trade-off decisions can only be made when the elements of the trade-off have been separated, and can be clearly understood and compared.

FinaMetrica in Malaysia and World Wide...Financial Advisers and Financial Services Professionals tell

The Malaysian Experience

"I find Deakin's Psychometric Financial Risk Profiler (PfRP) a systematic way to understand client's risk psychology in investment. I am very impressed when I first applied it for my own analysis and found that it is accurate on my risk profile. My actual score and my estimated score was very close to each other (differ by 1 point).

I have used it with my clients and I find out that it helps to enable them to understand their own risks tolerance in investment. I then followed up with an investment proposal for my clients and they are very pleased and have accepted my proposals.

Deakin's PfRP has helped both my clients and myself understand their risk tolerance and hence it enabled me to make appropriate investment proposal for them and thus it further enhance the standard of my professional advice and service."

Karen Lee
Principal Consultant
KAREN LEE & ASSOCIATES SDN. BHD. (Co. No. 580953-X)

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The Australian Experience

"Risk tolerance testing is a psychometric exercise and, in my opinion, FinaMetrica has the most advanced and practical tool that I have examined for measuring the risk tolerance of a financial advice client."

Wesley McMaster, CFP
Adj. Professor (Financial Planning) RMIT University
Past Chairman of the Financial Planning Association of Australia Ltd

The USA Experiences

"I believe that FinaMetrica is a world leader in the development of fundamentally sound, yet practical tools that enable practitioners to address the single most important factor in guiding clients towards a successful investment program - their personal risk profile."

Harold Evensky, CFP
Chairman,Evensky, Brown & Katz

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