Garrisonshas rolled out a new asset allocation and risk profiling system to its planners, following the establishment of a partnership with FinaMetrica earlier this year.
The new process combines FinaMetrica’s risk profiling questionnaire and Garrisons’ internal timeframe measure, which is based on clients’ estimation of their annual income and capital requirements over the medium to long term, to create a comprehensive risk assessment.
The change came in response to theFinancial Planning Association’s (FPA) directive on risk tolerance, including the need for planners to take into account clients’ psychological risk factors and tolerance to volatility in terms of income and capital over the short and longer terms.
Garrisons research and technical manager Keat Chew says, “The FPA and the industry is definitely moving away from the pigeon-holing approach of classifying clients as simply conservative or aggressive.”
The FinaMetrica system, which was developed with the assistance of the University of New South Wales Applied Psychology Unit, uses scientifically validated psychometric standards.
“One of the most innovative features of FinaMetrica is its use of psychometric testing to get a true evaluation of a client’s attitude towards risk. And the closer your evaluation is, the better the plan will be,” Chew says.
FinaMetrica chief executive Geoff Davey says, “The integration into the Garrisons’ process provides Garrisons advisers with an objective, transparent approach to needs-based planning that will facilitate their obtaining clients’ fully informed commitment.”
