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1st Software offers client profiler to cut down risk

The risk of IFAs misadvising clients could be substantially reduced with a new psychometric profiler from technology provider 1st Software which aims to accurately assess clients&#39 attitudes to risk.

The investment risk profiling tool will go live for the 8,500 advisers using 1st Software&#39s Adviser Office technology across 900 IFA businesses in the coming weeks.

Developed in partnership with behavioural consultancy specialist Silent Partner, the system asks a client 35 questions about their investment attitudes and creates a risk profile for them.

Clients are assessed in four stages – risk tolerance, expectation of return, decision speed and decision regret. Risk tolerance and expectation of return look at the time horizon of the investment.

The decision speed section asks the client how long it takes them to make decisions about long-term issues. The decision regret section determines how quickly the client&#39s personality is likely to turn against an investment decision they made if things go wrong.

Commercial director Mick Cons says: “This psychometric risk profiler reduces the risk of being an IFA. The system documents all of a client&#39s answers and, once a report is generated, a client signs off the assessment. The IFA can then safely match the investments to the risk profile.”

Fidelius Limited director Mark Osland: “As long as it recognises that different investments are for different timescales and require different levels of risk, it is likely to be better than the risk assessments most people are currently doing.”


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