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Research reveals concern over the level of understanding some wealth managers have for clients’ risk tolerance levels


A survey of 167 people who have taken professional advice on their investments over the past five years, reveals 29 per cent were not convinced their wealth manager understood their attitude towards risk when it came to investing.

The research, which was commissioned by behavioural finance experts Oxford Risk, found that only 69 per cent of retail investors who have used wealth managers felt their advisers used effective fact-finding methods to understand the investment needs and financial circumstances of their clients. One in twenty felt they were ineffective, and one in four (26 per cent) were unsure about their effectiveness.
More than three-quarters (77 per cent) of retail investors interviewed who have used a financial adviser over the past five years said they felt the advice received was tailored to them – 6 per cent said it was not and 17 per cent were unsure. Similarly, 77 per cent of those surveyed said the advice received from their wealth manager had been consistent over time, with just 3 per cent disagreeing with this view, and 19 per cent saying they did not know.      
Greg B Davies, PhD, Head of Behavioural Finance Oxford Risk says: “It is encouraging to see so many clients of wealth managers happy with the service they are receiving, but our findings reveal a significant minority who feel it could be improved.  
“As clients become more demanding in terms of service levels and quality of advice, wealth managers need to embrace technology to meet these needs.”   
Oxford Risk’s behavioural tools assess financial personality and preferences as well as changes in investors’ financial situations and, supplemented with other behavioural information and demographics, build a comprehensive profile. Oxford Risk’s financial personality tests can measure up to 18 distinct dimensions. 

Oxford Risk believes the best investment solution needs to be anchored on stable and accurate measures of risk tolerance. Behavioural profiling then provides an opportunity for investors to learn about their own attitudes, emotions, and biases, helping them prepare for the anxiety that is likely to arise. This should be used to help investors control their emotions, not define the suitable risk of the portfolio itself. 

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