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The FinaMetrica Risk Profiling System

Developed and tested in Australia over 4 years with the assistance of the University of New South Wales’ Applied Psychology Unit, the FinaMetrica system has gained international recognition as world’s best practice since its Australian launch in 1998. The FinaMetrica system offers previously unattainable levels of validity, reliability and accuracy in risk tolerance assessment.

The Development Process

The FinaMetrica system had its beginnings with The Survey of Financial Risk Tolerance (SOFRT) authored by Dr. Michael J. Roszkowski, Associate Professor of Psychology at The American College, Bryn Mawr, PA. Dr. Roszkowski is an acknowledged expert in the relationships between psychological and financial variables. The SOFRT was PC-based and used a 57-question questionnaire which took 30 minutes to complete.

FinaMetrica's first development phase was a pre-licensing evaluation of the SOFRT system, completed late 1997, which involved,

  • Australianising the language of the SOFRT,
  • Inventing the seven-segment Risk Tolerance Scale and the Risk Group/Differences reporting system,
  • Conducting useability and norming trials, and
  • Establishing an Australian database.

The evaluation was successful in confirming Australian validity and reliability. But advisers and clients reported that the SOFRT system was too cumbersome and time-consuming, and produced too little useful information (barely more than a score on a scale) to warrant the effort involved.

However, FinaMetrica could see how to overcome the shortcomings of the SOFRT. The second development phase, completed October 1998, became the creation of a new test and testing system which involved,

  • Developing questions with more perceived relevance and/or more usefulness in reporting and reduce the number of questions while maintaining psychometric integrity,
  • Inventing a new, more precise scoring algorithm which allowed reliability/accuracy to be improved and the number of questions to be reduced from 57 to 25,
  • Conducting of three further trials, and
  • Establishing the system on our website.

Psychological and psychometric expertise was provided by Chandler & Macleod Consultants during the first phase and by Drs. Austin Adams and Jim Bright of the Applied Psychology Unit at the University of New South Wales during the second phase. Drs Adams and Bright have certified that the FinaMetrica system exceeds internationally accepted psychometric standards.

A US Patent was granted in January 2006 (No.6859788).

View UNSW Certificate