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What People Say

Below you'll find quotes from Financial Advisers, Industry Professionals and Consumers.

Financial Advisers

Australia    Canada    New Zealand    United Kindom    United States

Australia

"Quite some years ago, we undertook our own in house research into the whole matter of how (on a practical level) to best go about assessing and understanding a client's risk profile. There were a number of tools available and as advisers in our own small boutique dealer group; we had experimented with those over many years with varying degrees of success. I guess our concern about the validity of these tools at that time is what led us to consider the FinaMetrica Tool.

As Advisers for over 20 years, my partner and I had many long standing clients whom we had come to know very well. I believe there is no better substitute for understanding an individual client’s risk profile than to have been able to see how they have actually reacted to bad news and/or investment opportunities in the past. Certainly having been able to observe their behaviour and actions over long periods gives me great confidence that I genuinely do understand their tolerance for risk. In my opinion, this is the ultimate test. Let's face it, I have not only seen how they react during highly volatile times but how they behave and whether they were willing to follow my advice and recommendations during those difficult periods (as we all know, at times it can be very challenging for clients to keep their head and behave rationally). Of course when you are facing a new client that you know little about really, you simply do not have the luxury of past experience and observation (although you will in time, provided you haven't completely misread them initially). This highlights the importance of having a highly reliable risk profiling tool.

We could think of no better way to test the different risk profiling tools available in the market, than by sending them to our long standing / well known clients and measuring the results against our own opinions formed after many years of interaction with them. We included two movie tickets as an incentive for them to complete and return the different risk profiling questionnaires and were pleased with the strong response (from memory I don't think we missed one).

The results were absolutely clear. The FinaMetrica tool was 100% accurate in all cases tested - not at any stage did I or my fellow advisers disagree with its general interpretation and we formed the conclusion that from a compliance and best practice perspective, it was the only tool we would allow going forward. In the case of other tools tested, there quite a number of cases where the interpretation was, in our subjective opinion, inaccurate and misleading - disturbingly so.

We continue to use the FinaMetrica profiling tool in our practice and are yet to find any fault with it. As well as giving accurate results. Its simplicity makes it easy to use and therefore more effective with clients. However, its' simplicity is deceptive, because it is in fact, quite sophisticated and the underlying science behind it, thoroughly researched.

I have provided this testimony in the interest of assisting professional advisers to better understand their client's needs and ultimately give better counsel."
Cameron Wenck CFP
Douglas Wenck Pty Ltd

"At Haintz Financial Services, we believe our clients have two risk profiles that must be addressed in a lifestyle financial plan - "aspirational" (whether their goals are reasonable, all things considered) and "emotional" (whether they will be comfortable staying the course). Our financial planning software accurately calculates lifelong cash flows and FinaMetrica provides us with a measured view of our clients' psychology. As financial planners we are able to take these two results, hold discussions with our clients, and ultimately produce a plan that will achieve their goals within their associated risk parameters."
David Haintz CFP
Haintz Financial Services

"Notwithstanding strongly held views to the contrary (usually by the protagonists themselves) financial advisers have not always been a good judge of the risk tolerance of their clients. Judgements based on experience or on the type of portfolio a client initially presents with are often seriously faulty in terms of a subsequent experience with clients in strongly adverse financial market conditions. As a result, adding some well researched and tested, external and consistent process to assist in this difficult area is of paramount importance. Furthermore, it is much more than just an issue of covering a compliance and risk management base for the business.

In my experience, in talking to other advisers in the industry, they regards risk profiling as simply a necessary evil which needs to be incorporated in the compliance process in case something goes wrong at a later stage. In many cases it is my understanding that only lip service is paid to this process and it is an issue of form over substance. In fact, when handled properly, the use of a tool such as FinaMetrica reinforces in the client the view that you take the issue of risk seriously and are interested in understanding how the individual you are dealing with may cope at a with risk. Having clients complete the questionnaire and then spending time dealing with the results is an important relationship building process if managed properly. Certainly, we all understand the limitations of psychometric testing, in that there is no perfect way to predetermine the psychological and behavioural traits of a client. Unfortunately, this understanding is often forged in the fires of adversity. However, it is clear that the more time you spend in dealing with what can go wrong and how clients may react is a very important process in terms of managing client expectations. Good financial planning relationships involve proper understanding of our clients’ needs and objectives, recognizing individuality, managing expectations and coaching and mentoring clients through the difficult times. A process which allows you to potentially target those clients who potentially need more handholding and explanation up front must be useful.

In practice, these profiling tools allow us to identify the outliers. That is, those clients who are sufficiently distant from the mean that we need to spend more time understanding their particular proclivities. Of course, the greater concern is those clients whose score indicates that they are unable to deal with the level of risk necessary to achieve their financial objectives. In this case the FinaMetrica tool is very useful in establishing the basis of a dialogue necessary to deal with the gap between tolerance and necessity. Documenting this process properly and getting a clients sign off on the outcome is of clear importance in getting a relationship off to the right start. By itself the tool is of limited value; but when used in conjunction with a properly structured and articulated relationship management process it leads to a significantly greater value."
Jim Kilkenny CFP
Kilkenny Rose & Associates

"FinaMetrica risk profiling gives our clients a thorough analysis of how they feel about risk. Our clients therefore feel more comfortable with our classification of their profile. FinaMetrica has helped us lift the standard of our professional advice and service."
Charlie Sorel CFA CFP
Hillross Financial Services Limited

"This is a key area that the industry as a whole does not handle well and it will come back to bite us in the Court in years to come. We need to delve into our clients’ minds. We need to more fully understand the things that are important to them, how they feel about life and to help them make smart decisions about their financial future. FinaMetrica not only helps us do that for our clients, but gives our practice a proven, scientific tool that will stand up to the most intense scrutiny."
Peter Leggett CFP
LEGGETT FINANCIAL

"As one of the handful of original CFPs still practising (and a former litigation lawyer) I’m concerned about the negative press associated with actions brought by investors seeking redress for poor advice. I’ve used FinaMetrica as part of my risk management armoury since the early pilot trials in the late 1990s and now have over 500 client risk profiles on the system. I have not only used and relied on the system, I have consistently advocated that my colleagues do the same. I recommend FinaMetrica because it is an essential first step before I can receive a client's informed consent. Indeed if all advisers and dealers used FinaMetrica and took notice of the results, I dare say we could eliminate most claims made against advisers for negligent advice."
Robert Kiddell CFP
McMillan Financial Planning Pty Ltd

"FinaMetrica reduces the subjectivity of assessing an individual’s risk profile, confirms that risk tolerance was discussed and records the results. FinaMetrica assists our firm in reducing the guesswork involved in analysing an individual’s risk profile."
Suzanne Haddan CFA CFP
BFG Financial Services

"We use FinaMetrica, CARM GPS and Xplan in an integrated process with all clients to identify, explain and reconcile the various conflicts that arise in a goals-driven plan. FinaMetrica’s online capability is a big plus as is the very positive client-feedback."
Michael Tratt CFP MBA
Australian Private Capital

Canada

"I have found the FinaMetrica system provides a unique, unbiased way to accurately access a client's risk tolerance level."
Alan Fustey CFA
Elysium Wealth Management

New Zealand

"We use FinaMetrica for all new clients and re-test existing clients, if determined by their wishes or circumstances, every three years. We test each person (if a couple) separately. Alongside the tolerance result we also have questions that assess risk capacity to give an overall assessment of the level of risk to be used in portfolios. We have modified the linking spreadsheet for our portfolio models and use this to assist in plan writing. We add the page about historical returns in plans to illustrate how the index versions of FinaMetrica portfolios (not ours) have behaved. We also quote selected questions and answers in the plan."
Katrina Hawker CFP
Capital Investment Planning Ltd

United Kingdom

"For the first time the client felt that they really understood the process and the trade off between risk and reward. In addition, we found that the client becomes more engaged and thus interested in the whole investment process. They take ownership of their plan."
Jason Butler CFP
Bloomsbury Financial Planning

"I think it is one of the most comprehensive risk profiling systems on the market. We have used it for the majority of our clients and the feedback has been very positive."
Jim Clancy
Clancy's Financial Planning

"We try to use the risk profiling questionnaires as a mandatory action for all prospective clients prior to any first meeting. The vast majority of clients seemingly enjoy this process with a high proportion completing the questionnaire online. I find this provides a far more objective insight into client’s views on risk before we have met and provides a meaningful starting point for any discussion during that first meeting.

From a compliance perspective, we have a policy of not providing advice unless a client has completed the questionnaire. Obviously, as and when required we will then reassess clients risk tolerance and discuss the outcome of their most recent questionnaires.

FinaMetrica is a more comprehensive and meaningful questionnaire than most clients have ever experienced, some comment upon its length and the appropriateness of certain questions, however a reluctance to complete this questionnaire is an early indication to us that the client may not be appropriate for our business!"
Duncan Orr CFP
Swindells & Gentry Financial Planning

"Not only has this provided a better way to discuss and implement issues about risk, FinaMetrica's systematic approach has provided a model for re-engineering some of our other financial planning processes."
Michael Hague CFP
The Consultancy Group

"Following our experiences with the market crash from 2000 to 2003 it became apparent that many clients were taking far more risk than they were comfortable with. FinaMetrica has now provided us with a much more robust system of assessing a client's attitude to risk.

Both our clients and advisers are much more comfortable with the results and our client's portfolios have been amended in order to reflect the FinaMetrica results. We do review the level of risk being taken each year but very few clients have changed their views over the last three years.

No system can be perfect but there is no doubt that FinaMetrica provides a much more accurate assessment of risk than the old 1-10 scale where everyone was 4 or 5. You therefore have much happier clients in the long term."
Peter Adams
Probity Consulting

"The strength of the system is in helping with the advice process. There is no doubt in my mind that it helps us to help clients understand how to bridge the gap between their level of comfort and the level of risk required for them to meet their objectives - whether that is by modifying their objectives or by accepting a different level of risk."
James Martineau CFP
Morton-Wilson Limited

United States

"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
Evensky & Katz

"FinaMetrica assists us in helping clients to clarify their risk tolerance - a tough topic at any time. They appreciate the extra effort and focus on their preferences. They also enjoy the immediate feedback from the on-line version and so do we!"
Margery Schiller CPA CFP
Goar, Endriss & Walker

"As an advisor, I have found it to be invaluable, and your firms insight on the division between risk capacity and risk attitude have not only helped us to be better at what we do, but have also helped our clients to be more satisfied and loyal.

First, I want to mention that after having reviewed dozens of risk profiles, we find it interesting that our client profiles fall into the traditional bell curve, demonstrating that our clients are representative of the overall population.

Second, I want to mention how helpful it is to have the original questions and answers for evaluation. In looking at a client score, their “out of character” answers occasionally indicate a “misread” question, but more often than not, indicate an irrational opinion that may be overcome through helpful education. We have found the questionnaire clearly and effectively brings out these points of incongruent thought on the part of the client, allowing us to address problem client perceptions before they become problem client behaviors.

Finally, I want to emphasize how comforting it is to have a valid, quantitative baseline from which to steer client portfolio selection. We have really come to view the risk attitude as the primary portfolio determinant and the risk capacity as a secondary determinant in many cases. Knowing that a client’s timeframe and objectives “can” tolerate a 100% equity portfolio is irrelevant if at the least bit of volatility they will be adamant about switching to cash. Discussions with clients tend to be about how far away from their “risk attitude” they can really step in order to optimize their “risk capacity.” And, such conversations have been in both directions of the baseline. We have a 90-year “young,” wonderful lady as a client who scored 61 on the questionnaire. While she was enthusiastic about the growth potential of her great-grandchildren’s inheritance, we had to discuss carefully the taming of expectations for “her” portfolio so that she doesn’t move her assets for an extra 2% somewhere else, and take on unnecessary volatility risk.

In summary, we have found so much more insight and information comes to us from using FinaMetrica than just a “score,” we’re not sure what we’d do without you!"
Adrian Eddleman MBA
Eddleman & Eddleman, LLC

"FinaMetrica is an intelligently designed, easy to use and cost-effective, risk profiling system that provides Cardiff Park Advisors with an objective framework for matching investor risk preferences with appropriately designed guided portfolio choices."
John Gorlow
President, Cardiff Park Advisors

"We review the raw number score with clients and how that equates to one of our firm's Models. Then we review with them their answers that differed from their risk group, noting which answers are more conservative (red down arrow on sheet) and those that are more aggressive versus the risk group (up green arrow). I jokingly refer to the usual array of green and red arrows on the page as their "risk schizophrenia." This draws a laugh, but they understand that people's emotions and answers vary and the purpose of the questionnaire is to get a 'General Understanding' of their risk tolerance. This entire discussion seems quite satisfactory to clients in helping to determine the appropriate model.

No one EVER asks during these discussions, or even afterward, "What is my expected range of volatility?" or something to that effect. Thus, I don't even go into the ranges; I know that as background for what's important to the client's emotional and financial well being."
Jeffrey Garell
Silversage Advisors

Financial Services Professionals

Australia    New Zealand    United Kindom    United States

Australia

"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

"FinaMetrica has set a new international benchmark for investor risk profiling. It is unparalleled in its ability to comprehensively reflect investor attitudes to risk. Without a clear and accurate picture of their risk profiles, it is unlikely that investors will be as comfortable with the investment results achieved, or the paths taken to get there. In any event, an adviser is obviously engaging in a high risk activity by not pursuing a quality risk profiling approach."
Graham Rich
Director, Brillient!
(Former Managing Director of Morningstar Australia and New Zealand)

"Sound business risk management requires appropriate due diligence to be done on all tools used in the advice process. The Courts can be expected to look critically on any risk tolerance tool that that has not been independently verified and validated as meeting appropriate standards. The Courts have a long history of dealing with issues involving the psychological attributes of individuals and the assessment of those attributes. The Courts recognise that this is a specialised area of the social sciences calling for specialised skills and disciplines."
Peter Bobbin
The Argyle Partnership Lawyers

New Zealand

"We find the FinaMetrica risk profiling test to be an extremely useful aid to determine the appropriate asset allocation for our investors. Of particular interest to us are prospective investor’s responses to the questions which focus on their discomfort levels with losses, preferred growth and defensive asset allocation splits, comfort with exposure to risky assets and performance expectations. If we find inconsistencies in their answers, we know that there is much to be gained in spending time exploring the reasons. We consider FinaMetrica’s risk tolerance test to be a very important component of new client induction and a key part of 'getting to know the client'."
Don Stewart
Executive Director, Stewart Financial Group

United Kingdom

"FinaMetrica is particularly helpful in identifying different attitudes to investment risk and loss between spouses. We now routinely quote in Minutes of client meetings some of the answers given to FinaMetrica questions."
Paul Etheridge MBE CFP
Chairman of The Prestwood Group of Companies
President of the Institute of Financial Planning 1986-96

United States

"There are, of course, other instruments out there, and other methodologies [for risk tolerance assessment], but I haven't seen any that are as academically and procedurally defensible as this."
Bob Veres
Publisher of 'Inside Information'
Past-Editor of MorningstarAdvisor.com
(Voted as one of the top five financial planning professionals by readers of Financial Planning magazine, 2001)

Consumers

A partner website* surveyed those consumers who had completed a FinaMetrica Risk Profile. Here's their report, together with specific consumer comments.

Was the FinaMetrica risk profile questionnaire easy to do?
Was the test easy to do?

“Most people enjoy knowing more about themselves and this sort of test is fun and interesting.”

“I found the questionnaire very useful and it is has given me greater confidence in considering and taking action with regard to investments.”

Did you understand your Risk Tolerance Report?
Did you understand the report?

“The exercise surprised me a little in that the results indicated that I was slightly more 'risk-taking' than I would have assessed for myself.”

"The test confirmed my perception of my risk tolerance and was useful from that respect. It is also useful in helping to understand the implications of one's level of risk tolerance. I could well imagine that some investors are vague in their understanding of risk tolerance so any system that can facilitate a better self awareness is worthwhile."

Was doing your risk profile a worthwhile exercise?
Was doing your risk profile a worthwhile exercise?

“The FinaMetrica risk tolerance report helps to crystallize your own attitude and therefore makes clearer the direction you should take.”

“Any information which provides a clearer picture when teamed up with other data can only assist with making more effective investment decisions.”

“The profile can be done by both partners individually and then, once they know their differences, together they determine a strategy that both are happy with. This would solve many arguments that are related to differing levels of risk tolerance.”

Do you think financial advisers should use a system like FinaMetrica's with their clients?
Do you think financial advisers should use a system like ProQuest's with their clients?

“I recently had meetings with two financial advisors and was very surprised at the lack of a risk assessment. I definitely think they should have to use a similar system to FinaMetrica's.”

*The website was ING's financial passages and the survey was conducted in 2000.