Oxford Risk Podcast Episode 9

MiFID II comes into effect on 3rd Jan 2018. These regulations go beyond risk tolerance but our interest focuses on the points of suitability and appropriateness.

  • Show notes

    The European Securities and Markets Authority (ESMA) introduced MiFID in 2007 to sufficiently facilitate cross-border investment services in Europe. These regulations have been updated in the form of MiFID II which will come into effect on 3rd Jan 2018. These regulations go beyond risk tolerance but our interest focuses on the points of suitability and appropriateness.


    As a requirement of the regulation, an advisor/platform must conduct an assessment to obtain information relevant to ascertaining which type of investment would be most suitable. The assessment has three stages:

    Knowledge and Experience

    covers the investor’s familiarity with types of service, transactions and regulated investments.  Also, the frequency that the investor may have performed these types of investments and the level of education or professional work experience the investor may have.

    Financial situation

    This is generally used as a knock-out stage, determining whether the investor can bear losing the investment without adversely affecting their current lifestyle. The advisor needs to consider the investor’s regular income, assets including investments, liquid assets and property. Regular financial commitments should also be considered.


    At this point the advisor discovers the client’s investment time horizon and purpose of the investment. The investor’s risk profile and risk tolerance must also be assessed.


    Should the investor be considered a professional, the advisor/platform will run an appropriateness assessment which consists of the Knowledge and Experience step and excludes questions on their financial situation and investment objectives.

    Another requirement as part of MiFID II is to keep a record of your investor’s suitability and investment appropriateness assessments.

    Under the new legislation, you are also required to run this assessment every time your investor wants to make an investment. By keeping records of the assessments, you will be able to see that over time, their risk preference will change, influencing the type of options that are suitable.

    Another very interesting development is MiFID II will also apply to robo-advisors. Under current legislation, they are exempt from MiFID but this is set to change. The updated regulations will apply to any firm providing investment advice or recommendations, regardless of the utilized technology.

    Fortunately, the ORR Online platform already covers all of these points. We encourage our existing clients to talk to us about the calibration of their RTQ to ensure they remain compliant. If you are not one of our clients, we would be very interested in talking to you to and help ensure you will be compliant come Jan 3rd 2018.


    To get in touch for more information about MiFID II and how we can assist, click here

Oxford Risk Podcast Episode 8

Investor risk profiling differs around the world

  • Show notes

    Whilst investor risk profiling has a relatively standard purpose globally - to ensure the suitability of assets offered to investors, the approach changes depending on where you are in the world.


    To get in touch for more information and a free trial of our online profiling platform, click here

Oxford Risk Podcast Episode 7

We have launched a new product - a Decumulation focused risk tolerance assessment, or ‘retirement finance risk assessment’.

  • Show notes

    Since the pension options market has been liberalised, we identified that there was a requirement for an assessment that was calibrated specifically for investors of that demographic.

    In general, risk tolerance questionnaires are calibrated for wealth accumulation, and so are not suitable for those seeking to draw down from their wealth instead of building it up.

    For more information, please click here, email: andre.correia@oxfordrisk.com or call Andre direct on +44 (0) 1865 292055


    To get in touch for more information and a free trial of our online profiling platform, click here

Oxford Risk Podcast Episode 6

Review of changes in investor preferences in 2016, Brexit, whether investor preferences change and what's to come in 2017

  • Show notes

    Andre Correia and Gillan Williams take an overview of 2016, a year full of change and how these changes have affected investor risk preferences.  The Brexit vote has huge implications but how have investors responded according to how much risk they are now willing to take?

    We have seen a general increase in appetite for risk since 2011 but this could be set to change as the effects of the vote take hold and investors consider the implications.

    We also tackle the notion that investor preferences do not change over time. Does this opinion actually match up to academic research?

    We also take a look ahead to 2017 and what we expect will happen in regards to investor preferences in the wake of the possible trigger of Article 50 and the Trump presidency.


    Questions asked:

    • The changes in investor preferences over 2016
    • How did the Brexit vote affect investor sentiment?
    • How has the financial services industry taken the changing nature of preferences into account?
    • There are some opinions in the market stating that investor preferences are static and do not change over time. How accurate is this, what does the evidence suggest? 
    • What is the outlook for 2017?



    To get in touch for more information and a free trial of our online profiling platform, click here

Oxford Risk Podcast Episode 5

Update to the Oxford Risk Rating online platform

  • Show notes

    Gillan Williams, Andre Correia and Dr. Casey Chen discuss the new developments in investor risk profiling and the measures taken to improve the Oxford Risk Rating Online platform. The Oxford Risk Rating Online platform (ORRO) offers industry leading investor risk profiling but at some point, all systems should be updated. Considering new developments in risk profiling and accounting for data gaps discovered by academics, we have updated the ORRO to take these adjustments into account.

    The system can be calibrated to account for specific demographic biases, providing greater reliability and improved suitability reports.

    If you are an existing client or are interested in how ORRO can help you provide the most appropiate investment advice to your customers, we strongly suggest you call Andre Correia on +44 (0) 1865 292051 to discuss your specific requirements.

    You can also read more here: https://www.oxfordrisk.com/our-insights/improved-risk-tolerance-assessments-to-be-launched-soon


    To get in touch for more information and a free trial of our online profiling platform, click here

Oxford Risk Podcast Episode 4

Insights into Evolutionary Game Theory and investor parallels with animal risk behaviour.

Oxford Risk Podcast Episode 3

Notes, links and extra information to supplement episode 3 of the Oxford Risk podcast.

  • Show notes

    The third episode of the Oxford Risk Podcast. In the first segment Gillan Williams and Andre Correia discuss Investor Risk Capacity and how it helps advisors understand more about their investors during the risk assessment. During the second segment, Dr Alex Chase explains the results of his study on UK voters and their shift in attitude towards large purchases after the Brexit vote and how that might affect investment decisions.

    What is Risk Capacity?

    Risk Capacity refers to the process we have devised that aids a advisor in establishing the investor's capacity for potentially losing an investment, and what level of investment might be most suitable.


    Study into the setiment of investors after the 'Brexit' vote

    Dr Alex Chase discusses the findings from his study into whether investors have changed their setiment towards large purchases after the vote to leave the EU. This may have significant impact on the demand for investment advice in the coming months.

    Here you can see the chart we refered to during the discussion:

    Click here to access the British Election Study

    Click here to access the Wealth and Assets Survey from the Office of National Statistics.

Oxford Risk Podcast Episode 2

Notes, links and extra information to supplement episode 2 of the Oxford Risk podcast.

  • Show notes

    During this episode, Gillan Williams and Andre Correia delve deeper into the process of investor risk profiling and focus on suitability. There has been a lot of discussion recently about the concept of suitability and how it affects the investment options offered to investors. There is still some lack of clarity regarding how the assessment works and its relevance, Gillan and Andre shed some light on this vital element of investor risk profiling and how it helps advisors offer the most suitable investments that account for their personal preferences and opinions.


    Questions covered:

    • What is suitability?
    • Isn’t this a standard element of investment risk profiling?
    • Why has the concept of suitability become more prevalent?
    • What has the market response been to this?


    Useful links to help understand suitability as part of an investor risk profiling process


    To get in touch for more information and a free trial of our online profiling platform, click here


Oxford Risk Podcast Episode 1

Notes, links and extra information to supplement episode 1 the Oxford Risk podcast.

  • Show notes

    Show questions and answers summary:


    What is investor risk profiling?

    It is the process during which you draw out detailed information to understand what an investor needs from their investments and to what extent they are comfortable with taking risk


    What is the industry requirement for this - Is it simply a case of compliance or does it go deeper than that?

    It started as a compliance concern – what a firm would have to undertake to assess their client’s risk profile, but there has been a lot of movement in this industry related to investor risk profiling. In 2011, the FSA (now FCA) released guidelines for advisors to assess the overall willingness of the individual to take risk and their capacity to absorb loss, which is linked to their specific circumstances and what they want to achieve.


    How important is risk profiling?

    It is important regarding compliance. Understanding the value and limitations of investor risk profiling is also important. The more information that you can provide to the investor which is contextualised in a format which they can understand, the better informed they will be about which investment formats are suitable.


    What makes Oxford Risk different?

    Firstly, the academic link with the University of Oxford, which informs and influences our work. We also have a particular focus on testing – our systems are perpetually tested to ensure they remain relevant and accurate.


    Useful links