Warning over 'flawed' risk-rating funds

clock

There are significant "flaws" in the use of risk profiling tools which could lead to accusations of mis-selling, according to a financial software provider.

Speaking at a roundtable event, Bruce Moss, strategy director of eValue FE, said many advisers are shoe-horning clients into unsuitable funds based on the answers given in psychometric risk questionnaires. This practice could lead to consumer dissatisfaction as decisions made can be based on short-term volatility and do not take into account a client's objectives or other assets. Moss also felt increasing use of these tools could undermine adviser business as they look to add value in the post RDR world. "How much will someone pay for [such a service]? What could be done that the c...

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 Pensions

DB pensions industry 'working against' govt finance agenda

DB pensions industry 'working against' govt finance agenda

There is little incentive for schemes not to take risk off the table

Jonathan Stapleton
clock 20 October 2023 • 2 min read
Preparing for October's 'dramatic' pension statement changes

Preparing for October's 'dramatic' pension statement changes

Changes on 1 October set to have major impacts on estimations

Hope William-Smith
clock 10 October 2023 • 2 min read
Pension transfer activity falls to lowest level in over five years

Pension transfer activity falls to lowest level in over five years

Transfer activity now half of that measured this time last year

Jonathan Stapleton
clock 31 August 2023 • 1 min read