INDUSTRY INSIGHT
FINANCIAL PLANNING
SPONSORED CONTENT
Pyschometrics and
Proper Risk Profiling
F
inding a financial advisor who can
get risk right is probably one of
the most challenging tasks facing
investors. How many of you know somebody
who has said, ”I can lose my own money,”
and subsequently fired their broker after
the last two major downturns (2000-02 and
2008-09)? For those of you whose financial
advisor has gotten it right, you are fortunate
to have a productive long-term relationship.
For those whose “glorified salesperson”
have gotten it wrong, their portfolios
could amount to a “countdown to failure”.
Today’s modern wealth management
firms have embraced advances in research
to provide a robust solution, underwritten
with statistical integrity.
Risk tolerance is psychological — it’s how
you feel about risk. Psychometrics — a
blend of psychology and statistics — is the
scientific discipline for the construction and
validation of psychological measurement.
All questions must be independently
validated, easy to understand, and be
directly relevant to risk tolerance.1
A sophisticated scoring algorithm would
calculate risk tolerance accurately. The
process has to be reliable and consistent.
The results should be on-target and
tightly grouped.
15 minutes invested in taking
the survey can affect the rest
of your life, especially if your
risk tolerance does not align
with your nest egg.
Because a good questionnaire is jargon-free,
questions don’t require explanation and can
be answered remotely — online or
paper-based — at your convenience.
As a result, you will understand better
your values, preferences, and sensitivities.
Furthermore, you will quantify how risk
tolerant you are overall, how you differ from
others in your peer group, and for couples
— how you differ from one another.
If you would like to try our complimentary
risk tolerance questionnaire, please visit us
at hampton-wealthmanagement.com.
We would be happy to discuss how well your
true risk tolerance matches your current
asset allocation.
1. For more details, see www.finametrica.com
One Pine Corporate Center, Suite 200
6021 Wallace Road Extension
Wexford, Pennsylvania 15090
[email protected]
hampton-wealthmanagement.com
Michael Lynn, MBA, AIF, AAMS, CMFC
Founder & President
412.600.2725
Registered Representative, Securities offered through Cambridge
Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.
Investment Advisor Representative. Cambridge Investment
Research Advisors, Inc., a Registered Investment Advisor.
Cambridge Investment Research Advisors, Inc. and Hampton
Hampton
Summer
2016 | icmags.com 33
Wealth Management,
LLC |are
not affiliated.