Adviser rejects psychometric risk profiling

While many advisers now use psychometric testing to assess client attitudes to risk, Mike Newton of Newton Ross said he wasn’t convinced of the usefulness of such tools.

“The bottom line is we don’t I guess give a client quizzes or a questionnaire to determine their risk profile,” he said. 

“In a way that’s kind of lazy, because you don’t have to do any forecasting work around the portfolio or the different outcomes.”

Rather than using tests to work out how conservative or aggressive clients are with regards to investments and using that information to design a portfolio, Newton Ross approaches the issue from the other end.