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March 15, 2016 at 02:28 PM
FinMason will expand its free risk tolerance assessment tool for retail investors into the financial advisor space.
The Boston-based financial technology firm announced on Tuesday that it hired Mark Hollingsworth, a former director of enterprise solutions at Riskalyze, as its new head of advisor solutions.
As part of this newly created role, Hollingsworth will help launch FinScore Pro, a new business division designed for financial firms and their advisors.
FinScore Pro will expand on FinMason’s current product, which provides investors with free access to their FinScore risk tolerance ranking. FinMason’s risk tolerance test is similar to an eye exam: Investors are shown different portfolios, how these portfolios would perform under different market scenarios, and asked if they are comfortable with more or less risk than the previous selection.
In a phone interview with ThinkAdvisor, FinMason CEO and founder Kendrick Wakeman described it as “a very easy way for investors to visualize their risk tolerance.” And FinScore Pro will allow advisors to use the same tools.
“Determining risk tolerance is a key part of investing, whether you’re doing it as a do-it-yourself investor or you’re doing it in conjunction with an advisor,” Wakeman told ThinkAdvisor.
Both Wakeman and Hollingsworth think risk assessment is missing from a lot of advisor-client relationships today.
“In the present, and for a very long time, investor risk tolerance has not really been a huge part of the advisor’s life,” Hollingsworth told ThinkAdvisor. “That has begun to change, but the actual standards for investor suitability and risk tolerance have remained in the dark ages for a long time, especially on the broker-dealer side. It’s a couple of boxes that you check on the account form, and I can tell you that an awful lot of advisors don’t even ask the questions. They just check the boxes that they think apply.”
