[The following is a guest post by Mark Friedenthal, the founder and CEO of Tolerisk®. Tolerisk is a risk tolerance assessment tool that is created for financial advisors and those in the wealth management industry. Prior to launching Tolerisk®, Friedenthal started Friedenthal Financial, where he worked as an investment advisor for private clients.
I think financial risk tolerance is a very big deal that doesn’t get a lot of attention in the personal finance space. Having witnessed the dot-com bust in 2000 and the subprime bust in 2008, I know that they can be painful for those who aren’t prepared. We’ve gotten close to another 8 years without a big collapse. Maybe the next one is around the corner.]
Whether you invest a significant amount in the markets, or you’re simply trying to grow a nice retirement savings account, you will want to work with a financial advisor who can provide expert insight and guidance. That being said, it is essential that you and your advisor agree to the amount of risk that is right for you, as you manage your investments.
Don’t feel like you have to attempt to figure out your risk tolerance level on your own. Instead, request that your financial advisor use advanced risk tolerance assessment software, such as Tolerisk®, in order to create the right plan of action for your specific situation.
Top Reasons Why Clients Request Tolerisk® Financial Risk Tolerance Assessment Software
- They want to know the right level of risk to be taking — and how it will likely evolve over time. Risk tolerance questionnaires are not new. Most financial advisors have been using these questionnaires with their clients for years, but most of these questionnaires lack a scientific approach. The majority of these questionnaires provide clients with a vague ‘moderate’ risk level. This leaves lots of room for interpretation by Advisors and clients alike. With good risk tolerance assessment software, scientific calculations are used to provide advisors with personalized results for each individual client. Ultimately, the assessment results provide clear guidance as to the next steps that should be taken with your particular portfolio risk.
- They want to understand how differing decisions (how long they work, how much they save, or how well they live) will impact risk level and how long their money will last. Your basic risk tolerance questionnaire is going to ask you a lot of questions about your personality. While this is one thing to consider when determining your risk level, there are also several other important factors that must be incorporated into your decisions. Request that your financial advisor use good risk tolerance assessment software that evaluates both your willingness and ability to take risk. There is a non-linear relationship between these two factors that must be analyzed in order to deliver expert results.
Ultimately, by working with a financial advisor who utilizes good risk tolerance assessment software, you can receive the expert care and guidance that you need as you maneuver through the financial markets. Tolerisk® is risk tolerance assessment software that takes into consideration both your willingness and ability to take risk. After the assessment is complete, your advisor will review a report that incorporates all of your unique information and produces very personalized results. This report, which is easy to read and interpret, can be used as a valuable resource when it comes to managing your investments and your expectations.