How accurate is your risk tolerance profiling?

Our data spans a decade, and hundreds of thousands of records. It is unrivalled in the sector for its quality and depth with every key type of investor.

Gillan Williams
Author Gillan Williams
Date 18th August 2016

Risk tolerance profiling

Since the FCA (then FSA’s) 2011 guidance on risk profiling, assessing an investor’s willingness to take risk has been a requirement for all financial advisors. Using a psychometric risk tolerance assessment to fulfil this requirement has become the industry ‘gold standard’. A consistent and reliable measure of risk tolerance is a fundamental first step in the process of offering sound investment advice, and is therefore a priority for all advisors. But how reliable is your risk tolerance profiling process?

Our algorithms and methodology are derived from research and analysis from the University of Oxford. Our instruments can assess not only risk tolerance, but a number of other meaningful measures, such as Composure, Risk Capacity and link the outputs to investment solutions through a suitability analysis. The OR Risk Profiling process provides the accuracy, consistency and clarity required, and is the leading solution in the UK market.

During the risk tolerance profiling process, the client answers a series of psychometric questions carefully designed to be easy to understand, and which provide a detailed analysis of their risk tolerance. Results are compared to thousands of profiles to accurately grade your investor’s tolerance relative to the relevant demographic of UK investors. Our data spans a decade, and hundreds of thousands of records. It is unrivalled in the sector for its quality and depth with every key type of investor, from the ‘advice gap’ segment to ‘ultra-high net worth’, and from those receiving traditional face-to-face advice, to those engaging with an online ‘robo-advice’ solution.

Offering a trustworthy service to your clients will have multiple benefits:

  • By simply having an affiliation to a system developed by the University of Oxford will establish credibility in your advice.

  • The demonstrable consistency and accuracy of the risk tolerance assessment will help you offer the most relevant and appropriate investment solutions for your clients.

  • The easy to understand assessments foster greater engagement with investors, even those with no previous knowledge or experience in investing, allowing them to better understand their options, make informed decisions, and develop trust with their advisor.

Using a risk tolerance assessment should be more than simply fulfilling regulatory obligations; you should have the ability to provide the most accurate information about an investor’s willingness to take risk, and therefore develop a robust risk profiling process to provide reliable advice to your clients.

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


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