Investments 

FE designs risk-profiling tool for advisers

FE designs risk-profiling tool for advisers

Data provider FE has launched a service aimed at helping advisers identify clients’ attitude to risk, and suitable investment products, in a bid to tackle inconsistencies in the space.

The FE Analytics+ Investment Planner tool will simultaneously aim to better establish the level of risk a client is willing to take, while matching this with investment products.

The launch of the service, which will also seek to help advisers provide “client-friendly” portfolio reporting, comes at a time when such practices are under increased scrutiny from regulators. 

The incoming Mifid II puts greater onus on fund buyers and providers to keep account for a client’s risk tolerance in product selection.

Earlier this year, the FCA used the findings of a suitability review to warn of cases where advice firms were not “considering or mitigating the limitations of the risk profiling tool, or where the recommended solution did not match the risk the customer was willing or able to take”.

Problems that arise when advisers use risk-profilers have included instances in which differences emerge between a client’s answers and the tool’s results, and cases in which risk is not presented to a client in a quantifiable form.

Matthew Surfleet, FE’s commercial director, said: “Establishing suitability is critical for all financial advisers. However, the processes employed to achieve this are often manual, inefficient and can vary, even within the same firm.”

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