Scientist warns of false confidence in 'witchcraft' risk profilers

Existing risk profiling tools present inaccurate outcomes, firm claims

Carmen Reichman
clock

An American company has developed a risk profiling tool it claims more accurately captures clients' risk appetites and should supersede the "witchcraft" products currently used by advisers.

Capital Preferences is launching a risk profiling tool in the UK which it claims delivers more meaningful and precise outcomes, based on mathematical evidence. The company wants its tool to replace those currently being used by advisers, which it said are based on psychology and deliver outcomes with "no statistical accuracy". The new tool is based on a scientific concept developed by Shachar Kariv, a professor of economics at UC Berkeley. It focuses on decision making and game theory techniques as well as mathematical theory, to determine a person's full risk profile and aversion ...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Your profession

News editor's view: Let's give it up for the small advice firms

News editor's view: Let's give it up for the small advice firms

The news editor's Friday Night Takeaway from 22 May

Isabel Baxter
clock 22 May 2026 • 4 min read
Women more likely to seek professional financial advice – research

Women more likely to seek professional financial advice – research

Twenty percent of women likely to seek advice

Sophia Panayi
clock 22 May 2026 • 2 min read
The expectation gap: Why suitable advice can still fail the client

The expectation gap: Why suitable advice can still fail the client

'The industry is moving from suitability, to understanding and now to expectation management'

Elly Dowding and Lee Coates
clock 22 May 2026 • 4 min read