How Financial DNA Delivers Risk Behavior Insights:
Accurately determining a client’s risk behaviors is critical for long-term financial planning success and Finra Rule 2111 compliance. The Financial DNA reports provide a step-by-step approach to determining the risk behavior of clients, couples, and advisors.
Each individual that participates in Financial DNA are assigned a Risk Behavior number of 0 to 100. This score is based on a blend of a person’s Risk Propensity and Risk Tolerance, where higher scores are associated with higher risk takers. The scores are normally distributed with a mean of 50, and a standard distribution of 10.
In addition to a numerical 0 to 100 Risk Behavior Score, participants of Financial DNA are also assigned a Risk Group. The risk group is used by advisors as a starting point in determining the ultimate structure of a client’s investment portfolio.
Individuals are grouped into one of seven risk groups, with portfolio structures ranging from Capital Protection to Aggressive and these insights are used to drive powerful questions between advisors, client’s and their family in building the ultimate financial plan.