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Mark Ainsworth
Author
Why Financial Advisors are asking so many questions
5 May 2021
Web based investment advisors such as Simplewealth and traditional investment advisors have a lot of differences in terms of speed, reliability and 24/7 accessibility.
Yet there is one thing they have in common: they both ask a lot of questions regarding their clients’ financial situation. There are two reasons for this: regulation and better service.
Some of those questions are required by the Swiss financial regulators to ensure the products sold match the needs of their clients.
These include, for example, questions regarding capacity to take risk, the client’s overall financial situation (such as assets and debt), how many people are dependent on the client (e.g., kids, partner staying at home, aging parents), regular ability to save and how much is usually spent.
Regulators want to ensure the products sold are suitable for the clients. Especially, before the financial crisis, some risky, unsuitable products were sold to clients looking for a safe investment. To avoid a repeat of such issues, regulators around the world, and especially in Switzerland, now require investment managers to understand the “risk profile” of their clients.
There is a second angle to it. At Simplewealth, we ask you questions because we want to get to know you better in order to serve you properly. We believe that is you tell us what your needs and goals are, then we can recommend to you what we think is best. Importantly, we need to know 4 things:
Based on this, Simplewealth can design an investment plan for you and make sound, rationale based investment decisions.
Yet there is one thing they have in common: they both ask a lot of questions regarding their clients’ financial situation. There are two reasons for this: regulation and better service.
Some of those questions are required by the Swiss financial regulators to ensure the products sold match the needs of their clients.
These include, for example, questions regarding capacity to take risk, the client’s overall financial situation (such as assets and debt), how many people are dependent on the client (e.g., kids, partner staying at home, aging parents), regular ability to save and how much is usually spent.
Regulators want to ensure the products sold are suitable for the clients. Especially, before the financial crisis, some risky, unsuitable products were sold to clients looking for a safe investment. To avoid a repeat of such issues, regulators around the world, and especially in Switzerland, now require investment managers to understand the “risk profile” of their clients.
There is a second angle to it. At Simplewealth, we ask you questions because we want to get to know you better in order to serve you properly. We believe that is you tell us what your needs and goals are, then we can recommend to you what we think is best. Importantly, we need to know 4 things:
- How much are you investing?
- What is your risk tolerance?
- What is your investment goal?
- How long do you plan to invest?
Based on this, Simplewealth can design an investment plan for you and make sound, rationale based investment decisions.
Autorisation
Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Simplewealth AG charges and expenses.
Simplewealth AG is a Swiss-based advisory service, designed to assist clients in achieving discrete financial goals. We are not intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client's financial situation and do not incorporate specific investments that clients hold elsewhere.
Past performance is not an indicator of future performance. Unless otherwise specified, all return figures shown above are for illustrative purposes only and are not actual customer or model returns. Actual returns will vary greatly and depend on personal and market conditions.
Investing implies your capital is at risk. The value of your account depends on market movements and you may get back less than you invest.
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