Fintech Impact

Summary:

During the 3rd episode of Fintech Impact, Jason Pereira, award-winning financial planner, university lecturer, writer, and host interviews Paul Resnik, Co-founder and Director at FinaMetrica. As a risk assessment company, FinaMetrica provides tools for financial advisors to figure out the risk tolerance of their clients. Paul Resnik shares his history in the industry, the uphill battles that FinaMetrica has faced, and what it will take to turn financial advising into more of a science than an art.

Show Notes

01:55 – Paul Resnik started FinaMetrica in 1994, but Paul has been in the industry

                    for almost 50 years.

●     02:17 – Changes in Australia occurred: the ability to consolidate investment

                    products onto a single platform and people not being prepared for their

                    portfolios crashing.

●     04:25 – Risk asseement was met with hesitation back in 1994 and now. Planners

                    often find it intrusive.

●     07:26 – FinaMetrica took four fours to assemble the 25 questions used in their

                    psychometric test – after trying out 150 questions. They have done almost

                    1.2 million tests.

●     09:08 – Men tend to be more risk tolerant than women. Financial workers and

                    highly confident people tend to be more risk tolerant than their clients. 

                    Factors that tend to not have any impact are age, education, and 

                    experience.

●     11:47 – FinaMetrica charges the most in the global marketplace for their risk

                    tolerance test. Their clients tend to be personal financial advisors in the

                    approximately 20 countries that they work in.

●     12:17 – FinaMetrica starts with a 25 or 12 question questionnaire to measure

                    financial risk tolerance juxtaposed against ethical, physical, and social  

                    tolerances to determine an average score and range.

●     16:56 – They link results to portfolios that have ranked at a similar level against a 

                    range of scenarios including: nominal returns, highs and lows, adjusted for

                    inflation, 10 worst falls, how long it took to crash and recover, and 10

                    highest rises.

●     21:56 – FinaMetrica, based in Australia, is merging with PlanPlus, a financial

                    planning company based in Toronto Canada. 90% of FinaMetrica’s

                    revenue is international. They integrated their systems roughly 10 years

                    ago and have looked for joined clients.

●     24:49 – The cost to implement FinaMetrica into their practice: $800-900 a year in

                    various countries.

●     26:15 – Thinking fast is our great survival. Thinking slow hurts, because people are

                    too busy thinking and not paying attention. People thinking fast are using

                    mental shortcuts/intuition.

●     29:31 – Survey in Georgia of financial advisors had results all over the place –

                    including the same client that received different answers from the same

                    planner.

●     35:00 – Planner’s unfortunately often project their own level of risk tolerance onto

                    their clients and the people running the money project their risk tolerance

                    onto the advisors.

●     37:13 – Paul Resnik left the corporate world in 1991 and established a life company

                    and an asset management business a few years prior to that.

●     38:29 – Competitors of FinaMetrica include: Oxford Risk in the UK and in Riskalyze

                    in the United States. 

●     41:17 – Paul Resnik is not a fan of Target Date Funds.

●     42:57 – Technology Tools Today is a US company for financial advisor technology

                    that puts out an annual survey. FinaMetrica has the highest user rating.

3 Key Points:

1. Risk tolerance is a personality, and personalities tend not to change.

2. FinaMetrica starts with a 25 or 12 question questionnaire to measure

   financial risk tolerance juxtaposed against ethical, physical, and social  

   tolerances to determine an average score and range.

3. The cost to implement FinaMetrica into their practice: $800-900 a year in

                    various countries.

Tweetable Quotes:

-   “We measure risk tolerance scientifically. We use a psychometric test…it took us four years to put together our 25 questions.” – Paul Resnik.

-   “Risk tolerance is a personality trait. Personality tends not to change.” – Paul Resnik.

-   “We are fighting for mind space. We are fighting for people to stop long enough and listen.” – Paul Resnik.

Resources Mentioned:

● Facebook – Jason Pereira’s Facebook

● LinkedIn – Jason Pereira’s LinkedIn

● FinaMetrica – Website for FinaMetrica

● Paul Resnik – LinkedIn for Paul Resnik