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In the late 1940’s and early 1950’s, the United Nations implemented a system of “simultaneous interpretation”, interpreting the six major global languages simultaneously through a headphones and channels system. The system was designed to improve communication and mitigate misunderstandings between delegates which could ultimately lead to undesirable outcomes in areas such as global policies, trade and military actions.
For far too long the financial services industry has relied on an outdated communication system of risk, attempting to distill down the complex mathematical equations of portfolio management into ambiguous terms like “moderate” or “aggressive”. The ultimate definition of these ambiguous terms rests in the eye of the beholder. What an end-investor concludes is “moderate” could be very different than what an advisor believes, or what a 3rd party manager believes is the appropriate risk. Every time a party is added to the process (think home office), the risk of miscommunication increases exponentially.
RiskPro is very similar to the United Nations headphones and channel system of simultaneous interpretation, in that, regardless of how many entities are a party to the investment process, each party receives and conveys risk in terms they understand using RiskPro. This state-of-the-art communication system is essential in understanding an end-client’s true investment objectives, improving the advisor-client relationship, and mitigating the intermediary’s suitability risks.