As a financial advisor, you know that risk tolerance assessment is critical to provide your clients with the results they want in a way that leaves them feeling confident about your wealth management skills. While there are dozens upon dozens of risk tolerance questionnaires available for you to use, most of these are inadequate and simply identify the majority of clients as having a moderate risk tolerance. This categorical financial risk tolerance assessment is almost always too vague to be put to good use, and can leave you feeling ineffective and frustrated.
Ultimately, personalized results are necessary to provide individual clients with the service they both need and desire. In fact, an increasing number of clients are turning to their advisors and requesting them to use financial risk tolerance assessment software in order to determine their risk level. If you’re looking to boost your customer satisfaction ratings and improve the results you provide your clients, the time is now to consider investing in a risk tolerance assessment tool.
How to Select the Right Financial Software for Your Firm
As you browse the available risk tolerance assessment tools on the market, it’s important to select the right resource for your firm. Here are a few of the features to keep in mind when purchasing a risk tolerance assessment tool:
- Begin by researching the methods used in reaching conclusions. It is ideal to select a risk tolerance assessment tool that utilizes a scientific approach to risk tolerance assessment. You’ll want a tool that incorporates the client’s cash-flows in addition to a personality profile. Make sure the tool you choose has a way for you to evaluate the reasonableness of the client’s assumptions. You don’t want to provide advice on a risk directive if it’s based on an untenable premise.
- Never settle for a risk tolerance assessment tool without customer support. You will want to have support available when you need it in order to maximize your use of financial planning software.
- Opt for a cloud-based tool that allows you to customize and update individual client profiles in a time and place that is convenient for you both.
Using Risk Tolerance Assessment Software
In addition to determining the general risk level of an individual client, the right risk tolerance assessment software also will allow you to:
- Determine the willingness as well as the ability of the individual client to take risk. Most risk tolerance assessment questionnaires simply calculate personality profiles without factoring in the client’s ability to actually take risks with their investments based on the chronology of their cash-flows.
- Identify whether the client has enough wealth to last throughout a lifetime. Combining mortality probabilities year-by-year, along with cash-flows, and personality, and examining them across a wide range of stock market, bond market, and inflation scenarios, premier risk tolerance assessment tools can provide clients with simple answers to this complex question.
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