will help you
After an interactive questionnaire with your client, you get a customized Suitable Report with five major components:
1) the objective data regarding the investorand the context of the investment project
2) 3 curves giving together a description of the subjective attitude toward risk
3) a qualitative analysis of the risk profile understandable for all client or prospect
4) "a suggestion box" providing technical ratios the distribution of a suitable portfolio's returns should follow
5) 3 indices characterizing the (generalized) risk attitude, the anxiety component and the objective capacity to bear the risk. These three indices together are both necessary and sufficient to yield a precise account of the risk profil of the investor.
It is now a fact that national financial authorities like FCA, AMF, EFMA, FINMA, etc. consider usual questionnaires as unsatisfactory, because subject to important biases in answers and, beyond these biases, to widely divergent possible interpretations. And Art. 25 of Mifid-II requires 1) to define the risk profile of the investor as a key input for suitability and 2) that officers in charge be given the necessary background to perform on a sound basis that task.
Providing such a background could be a high cost and - worse - what economists call a "sunk" cost (= a cost that might be entirely lost without compensation, e.g. if the employee resigns) to the organization. NERP™ has been designed as to keep this cost at its minimum. And yet, our software rests on available results from Science. It does not rely on simple "good sense". Too many "homemade" softwares of this sort could easily be proven to be only arbitrary and to provide little meaningful results, if any.
NERP™ doesn’t eat out your precious time. It takes between 6 and 20 clicks (with an average around 10 clicks only!) to reveal a risk profile of any individual. Questions are formulated by the software in reaction to the previously given answers in such a way that the investor doesn’t try to look smart to any analyst and answers what he really feels. Biases in answers are thus reduced to a minimum. This is all the more so because respondents, to a large extent, do not realize that they are revealing two mathematical functions encapsulating their risk attitude. Consequently, respondents are not in a situation to "manipulate" their answers to give the results they would like to see emerging from the test.
Behavioral economics has often come to the conclusion that answers given to an interactive computerized system can more reasonably be expected to reveal "true" preferences and actual behavior in real world situations than answers to individuals or to questionnaires. The answers to simple questions yield three curves. The two most important of them determine determine the generalized risk attitude of the retail investor: the scoring curve and the global uncertainty curve. The third one fine-tunes the cash time-preferences of the individual curve. Together with the objective capacity to bear the risk of the individual, the latter curve allows to finely categorize the risk profile of retail investors. Beyond such a categorization, computations can be made from the equations of these three curves (we provide the necessary module to detect the curves equations).
Your client will sign the synopsis of the data and results. As there is little leeway for interpretation, it will be difficult to him (her) to claim that the asset manager wrongly interpreted his (her) desires, to the contrary of what might happen on any questionnaire’s basis.
A forerunner to NERP has been in use starting 1999 in Geneva at UNIGESTION, which nevertheless subscribed to NeRP as a more efficient device. Mr. Patrick Fénal, Vice President of UNIGESTION, has kindly accepted to serve as a referee on our product. A quick information can also be grasped here.
NewEra RiSSK Profiler is a software as a service (SaaS) sold under several versions and possible numbers of users, one advanced version being possibly tailored to your needs. All versions allow immediate availability 7d/7, 24h/24 from our website. All insure full confidentiality of data, even if the kind of data which can be stored could hardly be of any use to anybody else than to your operator and to your organization.
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