What is FinaMetrica Risk Profiling System?

This is a simple way to understand and gain an astute understanding of your client's financial risk tolerance. It is an important part of the process which involves an increase in the knowledge about your client and is used by financial advisers all over the globe. It begun in the year 1998 and has been prominently used by countries such as Australia, the UK and the US.

Developed in Australia over a term of four years, beginning in the mid-1990s, it came into existence with the assistance of the University of New South Wales offering reliability and accuracy in assessing risk tolerance. Initially, this was adapted by smaller advisory groups and later on grew its base among-st larger organisations such as insurance companies and banks. This test has been translated into various other languages and has become a significant part of the lives of leading academicians and researchers. Also, a number of academic studies have also made use of the FinaMetrica test proving its importance in today's world.

The FinaMetrica Risk Profiling System constitutes of three parts:

• A psychometric test: This is done for the purpose of personal finance risk tolerance. This test is a combination of statistics and the study of psychology that helps determine personality traits and characteristics. It helps in assessing one's risk tolerance and maintains international standards of evaluation. The main focus of attention is upon reliability and validity.
• Results: The result of the test is important for the financial planning process.
• Study material: This is created in order to help and explain investors about the investment risks they are undertaking and the returns. This will also provide them with a fair idea of how their future performance will be.

Therefore, this method is not only useful to measure the risk tolerance, but also helps understand the clients better. A  FinaMetrica Risk Profiling System is the perfect solution to determine returns expectations and arriving at a consensus (for financial issues related to equities, debt and cash).