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Mapping portfolios to Oxford Risk

Aware that the Oxford Risk suite of risk profiling tools is popular with a number of advisers, Parmenion have commissioned Oxford Risk to map their two key attitude to risk questionnaires to our risk framework’s strategic asset allocations. Oxford have written a short guide to this process for advisers on the Parmenion platform.

Who are Oxford Risk?

Oxford Risk was founded in 2002 by a team of behavioural scientists from Oxford University.

They are a leading provider of suitability tools and risk profiling solutions and financial decision support software to financial institutions, harnessing the power of behavioural finance through technology to help investors make decisions more effectively.

Risk Questionnaires

Oxford Risk have a sophisticated range of tools including more than one risk profiling questionnaire. The most popular offer either 5 or 7 Risk Profiles. Both have been mapped to Parmenion’s Risk Grades. As Parmenion manage 10 Risk Grades in our portfolio solutions the Oxford Risk Profiles will, in certain cases, overlap more than one portfolio, requiring a judgement on which should be recommended to an individual client.

Basis of mapping

What is being measured by the Oxford Risk questionnaire is Risk Tolerance. This is an investor’s long-term psychological willingness to trade-off risk and return. The answers to the questionnaire are scored. Then the individual’s aggregate score will place them at some point along the distribution between the least and most risk tolerant extremes within the observed population, corresponding to one of Oxford Risk’s descriptive Risk Profiles.

Using Oxford Risk on the Parmenion Platform

For certain risk profiling tools our platform offers supporting functionality to make the process of portfolio selection more time efficient. However, in this case, with both a 5 and 7 Risk Profile scales and an element of judgement needed where Risk Profiles cover multiple Risk Grades, this is less appropriate. Having completed an Oxford Risk questionnaire, advisers will choose the most appropriate portfolio. Simply skip the risk profiling page in Portfolio Builder and select an appropriate risk grade as indicated below.


Oxford Risk 1.1
 


Oxford Risk 1.2

Updates

Our engagement with Oxford Risk envisages an annual review of their mapping of our Risk Grades to their Risk Profiles. Parmenion will keep advisers updated on any changes.

Any questions?

Please take a minute to review the document below, drafted by Oxford Risk.

If you have any further questions, please do not hesitate to contact our client services team on 0117 204 7678.



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