FAs Could Score Referrals Through This Online Startup
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Wednesday, June 3, 2015

FAs Could Score Referrals Through This Online Startup

A new service from a Boston-based financial technology startup offers broker-dealers, RIAs, and advisors a way to land referrals from individual investors who are looking for help.

On Monday FinMason unveiled a new risk-tolerance assessment tool called FinScore, which is designed for easy use by individual investors, retirement plan participants and financial advisors. Kendrick Wakeman, CEO of FinMason, confirms to MFWire that the business model for the new tool is to get retail investing platforms to pay to advertise on the service. (The individual investors can use the new tool for free.)

FinScore works by asking the prospective investor to submit information about their income, savings habits, and retirement goals. Then users are asked to repeatedly choose portfolios in head-to-head comparisons until the user's responses can be accurately assessed on a 1 to 100 scale of relative risk tolerance. When they choose a portfolio, the site would then offer to refer the individual investor to the retail investing platform behind that portfolio; this is where the sponsors come in.

The impetus for this service came from a study conducted by FinMason which demonstrated that non-professional investors lack the financial acumen to decipher the traditional portfolio risk pie-chart. Wakeman believes this widespread financial illiteracy poses a systematic risk to the financial system and that services like FinScore are a sorely needed tool to counteract this threat.

Comparing a FinScore to a shoe size, Wakeman hopes that by "allowing users to decide for themselves which risks are appropriate and which are not when investing for retirement," this tool will make it easier for financial advisors to better serve their clients according to their respective risk tolerances just as shoe size helps consumers in picking out footwear.

This self-funded start-up was founded in 2012 by Wakeman, who was most recently a managing partner at Badon Hill Asset Management. Prior to that Wakeman served as a PM at Lazard Asset Management.

FinMason focuses on financial education for layperson, but Wakeman has additional plans to expand its services to include business to business financial guidance. The company also operates a fictitious, online, protest group called Deny the Pie, which advocates for the demise of the pie chart.

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