Financial Planning Conversations

Competition, automated advice and increasing professional standards are among the trends driving your advice business in 2018.

Many people think they understand risk tolerance, but often they have fallen prey to one of the 10 myths that stalk this frequently misunderstood area. This podcast busts those myths to set the record straight.

The biggest drivers of trust in financial advisors are relationship factors, such as advocating for the client and acting in their best interest. So, can a robo advisor be programmed to create trust in similar ways?

What creates trust between financial advisors and their clients? What can damage that trust? And why does trust matter anyway? This podcast has the answers, thanks to new research.

Investment suitability is emerging as a critical issue for financial advice firms. This podcast previews a workshop being held in London on 1 November, where experts will explore the competitive challenges and opportunities. Grab a free ticket at https://www.eventbrite.co.uk/e/whats-happening-with-suitability-out-there-tickets-38620681498?aff=es2

Individual investors make common mistakes that cause them to buy the wrong stocks, trade them too often and underperform the index benchmarks.(First broadcast 24th February 2016).

Comparative reviews of risk tolerance tests in the UK and US show that FinaMetrica is a clear 'best-of-breed' choice, with a solid scientific base and more than one million client profiles completed.

Up to US$200 billion in asset management fees are up for grabs according to a new report from EY, which argues those delivering a superior client experience will win the assets and the fee revenue. (First broadcast 7th September 2016).

Find out if your risk profiling assessment tools are fit for purpose, or potentially giving you incorrect information as Paul Resnik guides you through a due-diligence checklist that will test your risk tolerance systems. (First broadcast 27th January 2016.)

Investment suitability is often not a clear-cut concept, with no agreed definitions and a lot of subjective judgements brought to bear. This podcast explores what suitability looks like around the world.

miPlanPlus is an impressive new white-label robo advisor, whose risk tolerance assessments are powered by FinaMetrica. In this episode we look inside miPlanPlus with Shawn Brayman from PlanPlus, the creator of miPlanPlus, and our regular guest Paul Resnik, from FinaMetrica. (First broadcast November 2016).

Regulation in the United Kingdom and Europe is making fund managers responsible for their products' investment suitability - a new requirement that many are struggling to get their heads around.

A new guide to the language of risk has been released by FinaMetrica, to help the industry focus on how risk is described and put into context for customers. In this episode, the creators of the guide explain why and how they undertook this work. (First broadcast September 2016).

Many robo advisors do not do a very thorough job, as they don't collect the personal, financial and risk tolerance data they need to give good advice and make suitable investment recommendations. This podcast explains how to distinguish a good robo from a bad robo. (First broadcast October 2015)

Enterprises need an agreed, consistent process for quantifying, contextualising and explaining risk. This includes 1) a reliable and valid methodology to assess risk tolerance; 2) proven algorithms to link the tolerance measure to portfolio solutions; 3) an agreed and standardised language of risk; and 4) a standard process of demonstrating examples of risk and return. (First broadcast 1 June 2016)

Financial advisors who claim to give good advice must be able to prove these five critical things. (First broadcast: May 2016)

Poor investment suitability is the cause of tens of thousands of phone calls from anxious investors, which cost the financial services industry millions of dollars to answer. But fixing the investment suitability problem can dramatically reduce those costs.

The next market crash is coming, but advisors can prepare their clients so they keep their cool and remain invested. This podcast explains how to frame and manage clients' expectations of market volatility.

There is no common standard in risk tolerance profiling, leading to confusion for those seeking a robust profiling solution. This podcast discusses three common problems with profilers - no basis for their construction; the flawed combining of risk tolerance with risk capacity and the co-opting of prospect theory for risk tolerance.

Risk profiling has gone through five evolutionary stages from its small beginnings in the 1980s to its central part in financial planning today. This podcast charts that history and looks forward to the next stage, which has already begun to emerge.

The low levels of financial literacy among clients pose particular challenges for financial advisors, who must ensure that people are giving their informed consent to the financial plan put before them. In this podcast Paul Resnik explores how advisors can respond to this challenge.

Clients are demanding much more from their financial advisors and wealth managers - and many will dump you if you don't meet their needs! A recent survey of global investors found that around 75% would happily take robo-advice, while another survey reports that as many as 65% of customers are ready to dump their advisor or manager if they don't get what they want. But Paul Resnik, from FinaMetrica, says you can make them stay by adapting to provide advice that recognises and takes into account the person's financial risk tolerance.

Investment suitability is becoming a hot topic in 2017, with a groundswell of voices in the US, UK, Canada, Australia & Hong Kong calling for reform to how advisors address questions of suitability.

A test alone does not satisfy the regulatory requirements to take risk tolerance into account, which requires that the test result be mapped to investment decisions and framed with the client.

Recent audits of 'in-house' risk profiling systems have revealed that most are poorly constructed and lack integrity and validity. In this podcast the auditor explains the problems he found.

Paul Resnik discusses the news, events and trends that shaped financial services in 2016 including the rise of robo advisors and the shock political events in the United States and UK.

There is a growing trend in the United States of financial advice software being built by integration with 'best-of-breed' components from specialist providers. Paul Resnik explains how FinaMetrica delivers these integration solutions.

Asset managers are facing a squeeze on fees as investors change the way they invest and competitors cut prices and margins.

miPlan is an impressive new white-label robo advisor, whose risk tolerance assessments are powered by FinaMetrica. In this episode we look inside miPlan with Shawn Brayman from PlanPlus, the creator of miPlan, and our regular guest Paul Resnik, from FinaMetrica.

Measuring risk tolerance is key requirement of all regulators, yet none give meaningful guides on how to do it. Paul Resnik fills in the missing gaps on how to measure risk tolerance and understand its nuances.

A new survey of investors shows many have unrealistic expectations about the potential earnings from their investments, with many expecting annual returns of 10% or more. Most are likely to be disappointed, posing risks for financial advisors who could lose clients through no fault of their own.

A new guide to the language of risk has been released by FinaMetrica, to help the industry focus on how risk is described and put into context for customers. In this episode, the creators of the guide explain why and how they undertook this work.

Episode 30: Making Client Experience Your Competitive Advantage by Paul Resnik

There has been a dramatic increase in the number of lawsuits lodged against trustees of 401(k) and other U.S. retirement savings plans, as they are held to account for their fiduciary duties. While current suits target fees, future lawsuits could focus on the processes used to profile investors and match them to appropriate investments.

Robo-advisors carry out the instructions in their algorithm to make a decision. But often the details of that formula are hidden from sight inside a 'black-box', raising serious compliance issues and questions about the quality of the advice.

The collapse of high profile robo advisor 'SheCapital' highlights the difficulties faced by 'stand-alone' robos. The high costs of acquiring clients is likely to mean most will never make a profit. But enterprise robos are flourishing and proving very successful. These are used by large firms like banks and funds managers to deliver a consistent outcome and experience across large, diversified organisations that already have large customer bases.

The Myers-Briggs Type Indicator psychological profile is used throughout the world - even though it has no scientific basis or validity. We explore how 'junk' psychological testing can cast a negative shadow over tests that are scientifically rigorous and produce valid, repeatable results. And we discuss what makes a 'good' psychological test.

Watch the football, imagine it's summer, go toss a frisbee! Ignoring the Brexit volatility is the best strategy - provided clients have correctly framed expectations and are invested in accordance with their risk tolerance.

As he travels through the UK, Europe and United States Paul Resnik is seeing five recurring themes that are driving the evolution and practices of financial advice. In this episode, he shares what he has learned.

Paul Resnik guides us through the four consistencies required by financial services providers around measuring, using and explaining risk tolerance profiling.

Paul Resnik discusses the five things that every advisor hoping to give good advice must know about their client.

Target date funds are a US$750 billion sector that may be running into trouble with the tough new Department of Labor fiduciary rules. Meanwhile, new research shows that target date funds are delivering terrible underperformance to many of their investors.

The US Department of Labor has released new rules extending fiduciary standards to everyone advising on retirement savings. In this episode we examine the new rules and their implications.

Investment money has not flowed back into equity markets despite a large recovery since 2008. But Paul Resnik says that even though people's behaviour has changed their risk tolerance is, most likely, unchanged.

A new FINRA report on standards for robo-advice is taking a tough line on what does, and does not, constitute good advice. It's likely this is only the starting point, with equal standards to be enforced across all parts of the industry. The FINRA report can be found at: www.finra.org/sites/default/files/digital-investment-advice-report.pdf You can access the referenced blog at: www.riskprofiling.com/blog/March-2016/finrareport

This episode examines the costs and underperformance incurred by individual investors who manage their own investment decisions. The referenced graph: www.riskprofiling.com/Downloads/episode17.pdf

In this episode Paul Resnik discusses the mistakes made by individual investors that cause them to buy the wrong stocks, trade them to often and underperform the index benchmarks. http://www.umass.edu/preferen/You%20Must%20Read%20This/Barber-Odean%202011.pdf

In the United States regulators moving toward fiduciary rules for financial advice are experiencing a savage push-back from some parts of the industry. Paul Resnik explains the Department of Labor's new fiduciary rule and signals from FINRA and the SEC that they might be on the same path.

Is your risk profiling assessment tool fit for purpose and true to label? Paul Resnik discusses a new rigorous checklist that helps you do a proper due-diligence of the different risk tolerance tools on the marketplace today.

In this episode, Paul Resnik discusses if 2016's market gyrations could catch-out advisors and product issuers who have taken shortcuts and recommended financial products that are unsuitable for their clients.

Paul Resnik reflects on the trends and forces that shaped the financial advice sector in the United States, United Kingdom and Australia. He believes the most significant development this year was the emergence of the robo-adviser.