We know that the stock market drops sometimes, but it has been very kind to investors who can stay the course for the long-term. The question is: How much short-term fluctuation is comfortable for you? I’ll bet your answer is different from mine, and your answer is likely to be different from your partner’s.
Because couples share so much—a house, families, hopes, and dreams—it’s crucial that we understand if they share the same view on investment risk. That’s why BWFA has introduced a new investment survey called FinaMetrica.
FinaMetrica is a scientifically validated survey tool for measuring comfort with risk. It’s a 25-question quiz that can be done in 15 minutes online, and it generates a score that compares you with the general population. A high score suggests that you are more comfortable with risk than the general population; a lower score indicates the opposite.
|Here are two sample questions:|
|When faced with a major financial decision, are you more concerned about the possible losses or the possible gains?|
|Imagine you were in a job where you could choose whether to be paid salary, commission, or a mix of both. Which would you pick?|
We started by quizzing the staff of BWFA and then our Client Advisory Board. The reviews from both groups have been positive, so we’re now using FinaMetrica to learn more about the attitudes of our investment management clients. Our goal is to incorporate that knowledge into building financial plans that track your risk preference even more accurately.
For some couples, both partners have similar scores; for some couples, the partners have very different scores. Sometimes we can predict your score, and other times you surprise us. As your advisor, it’s important for us to have thoughtful conversations about risk, and this is an excellent starting place.
At BWFA we invest for success using one of seven investment plans. We call the plans our “Model” portfolios. You and your advisor select the Model that best suits you based on a number of things—investment goals, timeframe, your tax situation, income, expenses, and risk tolerance. With FinaMetrica we have a better tool to measure risk tolerance.
At BWFA we want to promote family harmony, help you sleep well at night, and keep you invested so that you can enjoy long-term market performance. We believe that understanding your risk tolerance will contribute to serving you better.
If you haven’t tried FinaMetrica yet, ask your BWFA advisor about adding it to your next investment review.