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FinaMetrica and PlanPlus merge!

In a classic case of one plus one equalling three, two of the leading purveyors of wealth management advice tools have joined forces to create an industry powerhouse.

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What is risk tolerance and why do we measure it?

Risk tolerance is how emotionally comfortable a person is with taking financial risk. For example, how much a person is willing for their portfolio to diminish for a chance to make bigger returns. It is psychological and is best measured with a psychometric tool.

By knowing how comfortable a client is with investment ups and downs, advisors can make sure their clients don’t panic, or worse, blame the advisor when a risk is realised.

Risk Tolerance and Risk Profiling

Risk profiling is a process for finding the optimal level of investment risk for your client by balancing their risk required, risk capacity and their individual risk tolerance.

Risk Required
Risk Capacity
Risk Tolerance
There is often a mismatch between risk required, capacity and tolerance. FinaMetrica helps you to identify mismatches and resolve them with your client.
See our Quickstart Guide for a step-by-step process for the best practice risk profiling.
Risk Tolerance
Risk Required
Risk Capacity
Risk Tolerance
is the level of financial risk
the client
is emotionally comfortable
with.
Risk Required is
the risk associated
with the return
required to achieve
the client's goals from the
financial resources
available.
Risk Capacity
is the level of
financial risk the
client can afford
to take.

Give it a go

Invite your clients to complete the risk tolerance profile,
and compare their risk tolerance with their investment strategy.
 
Step One:
Complete the profile:

Have your clients complete the risk tolerance profile in their own time. If it’s a couple, have them complete it individually (it’s remarkable how different partners are).

Step Two:
The first conversation with a client:

Make the very first conversation a chance to demonstrate
more value and win trust faster by showing how your services meet your client's risk tolerance profile. Financial advisors use our Risk Tolerance Toolkit™ to gain a deeper understanding of the individual client, without creating more work for you. Explore sample risk tolerance profiles.

Step Three:
Creating the portfolio:

The FinaMetrica Risk Tolerance Toolkit™ lets you navigate expectations and portfolios you know clients will be happy with. It also lets you navigate expectations and differences between couples — long before there’s ever a problem. You can show that your recommendations are right for them. Explore how we map risk tolerance scores to portfolios.

Step Four:
Riding ups and downs

The markets may drop but your clients' confidence won't. Financial advisors return to the FinaMetrica Risk Tolerance Toolkit™ to help manage expectations when portfolios change. It means clients make fewer panicked calls and are confident in your advice. Explore our risk and return reports.

Step Five:
Major life changes

Weddings and divorces, dreams and disasters: unforeseen life events can fracture the once strong foundations. Financial advisors return to the FinaMetrica Risk Tolerance Toolkit™ to ensure that when circumstances change, your client’s trust in your advice doesn’t.

Create portfolios with the longevity to see clients through the ups and downs of life and changes in the market conditions.

With more than a million risk tolerance profiles completed to date, see how we’ve created the most valid and reliable measure of risk tolerance.
Scientific risk tolerance profile
An empirical basis for mapping the risk tolerance profile results into the financial advice process
Unique historical analysis explaining risk and return in the context of a client's risk tolerance