Software provider Financial Express has added FinaMetrica’s risk-profiling technology to its service to help advisers see if an investment portfolio fits with a client’s risk comfort zone.
FinaMetrica’s tool scientifically assesses a client’s risk tolerance, helping advisers deliver suitable investment advice.
The technology, which is part of FE’s asset allocation tools, allows advisers to make an ‘apples-to-apples’ comparison between a client’s own risk tolerance and the inherent risk in the investment strategy required to achieve their goals.
Paul Resnik, director of FinaMetrica, said there is a growing body of evidence to suggest investors with “unframed” risk and investment expectations have underperforming portfolios.
He said investors are prone to respond emotionally to the markets, which can negatively impact their portfolios.
According to Mr Resnik, installing the tool helps ensure investors are able to give “truly informed consent” before making any investment decisions.
The classification automatically breaks down a broad range of equity and fixed income asset classes to give an overview of a client’s current allocations, splitting the portfolio into growth versus defensive assets.
The FE FinaMetrica tool is available for no extra cost.
Matt Surfleet, commercial director at Financial Express, said risk profiling looks set to become a key addition to the FE toolkit, particularly given the continued focus on client suitability.
