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Wealthzine

Paul Resnik Co-founder, Finametrica

Paul Resnik’s stint in financial services industry in Australia began in 1970. Since then he has worked in a broad array of roles including establishing and being Founding Executive of financial planning, funds management and life insurance businesses.

Since 1991, he has been an industry consultant providing product and distribution advice to all of Australia’s major banks, life companies and most funds managers and financial planning groups.

Paul is a regular commentator on industry issues in both the media and on conference stage.

It is an instruction in writing from the client to their advisor of their risk tolerance. It is one of the few measurable issues in a client’s life that is likely to remain constant over time. Almost invariably, couples will have different risk tolerances. In the planning process, the discussion around these differences will assist the clients to better understand themselves. It is a robust proof that the advisor made an attempt to know their client. Profiler therefore, enables a solid link from risk scores to the establishment of investor’s expectations

Investors pay more attention to recent investment news and fail to take into account longer term history of shares and markets. They tend to see less risk when investment markets are at their high points and see more risks in markets when they are at their low points. Investors do not have a good understanding of the key risk terms and easily become confused by them; risk profile, risk tolerance, risk needed, risk capacity, risk attitude, risk perception, etc.

Psychometrics is a science which has a consistent and replicable methodology. Psychometrics measures what it purports to measure, in our case the trait of one person, their financial risk tolerance. Other approaches are not intellectually robust and usually add non trait questions. Their goal is to throw up an asset allocation or portfolio recommendation.

In our case, we have not changed the test significantly since 1998. This is because we did it properly before commencing the business. This is because change might devalue the integrity of period to period comparisons

We work with university academics mainly in Australia and the US, reviewing risk results against other more time relevant data. We are currently working with a couple of universities to explore the impact of the GFC on investor’s perceptions of risk. We report the outcomes as they become available in our monthly newsletter.

At this stage, we do not believe that there are any significant differences. As volumes build, we will analyze and compare Indian results to other countries. We will explore any opportunities that come up to add to the understanding of India and investment.

I do see the exploration of the different dynamics in the family structure to be one worth exploring. I would be pleased to receive your feedback on what you would expect to find. It could be an area for future work between you, us and perhaps some Indian institutions.

We have found little difference in risk scores to date. Having said that, most of our initial numbers have come from the English speaking world. My personal expectation is that there will be little difference in india. Time and numbers will tell the tale though.

  • We are independent of any investment manufacturer.
  • We are the only single purpose company in this space that we are aware of.
  • We are still driven by our founders, who between them, have over 60 years experience in almost all the other facets of the financial services supply chain. This means that our work is generally context rich
  • We have been collecting and analyzing responses since 1998, longer than anyone else.
  • We have the broadest international exposure that we know of.
  • We have more than 400,000 profiles complete
  • We undertake in any one week up to 3,000 profiles
  • We regularly work with academics around the world, we are not sure if others have a similar commitment
  • Once we have a subscriber, we very rarely lose them. Our renewal rate is exemplary.
  • We seem to be the assessment tool of choice for high-end early adopter advisors around the world.

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