American fintech company Capital Preferences has launched in the Australian market, announcing a strategic partnership with PortfolioConstruction Forum at Stone and Chalk this morning.
American fintech company Capital Preferences has launched in the Australian market, announcing a strategic partnership with PortfolioConstruction Forum at Stone and Chalk this morning.
Capital Preferences provide consumer profiling, product recommendation and compliance technology to consumer financial services firms.
The partnership sees the introduction of a ‘Quantitative Advice Methods’ training program aimed at financial advisers serving the Australian and New Zealand private banking, superannuation and retail markets. It will focus on the application of game theory and econometrics to client profiling and portfolio construction.
PortfolioConstruction Forum will be the accreditation provider of the training program and its founder and director, Graham Rich, said the program will help build advisers’ understanding of a consumer’s risk, time and social preferences.
“Capital Preferences’ academic faculty are innovative thought leaders who bring something entirely new to the understanding of … [customising] client portfolios with this data,” he said.
“I believe they will see great success in our sophisticated and client-focused community. Ours is a market that desperately needs innovation and new thinking.”
Complexity shapes investor decisions
In a public masterclass this morning with Professor Daniel Silverman, senior research advisor for Capital Preferences and Professor of Economics at Arizona State University, Silverman discussed new findings from a study by Capital Preferences which provide the foundations for the new training program.
According to the findings, Silverman found that increased financial choices can negatively impact on a consumer’s investment decisions.
This insight has great implications for financial services firms, consumers, and marketers when designing products, portfolios and their digital experience.
Speaking before an audience at Stone and Chalk this morning, Silverman said that having access to greater financial choice was both a “blessing and a curse” and with the rapid proliferation of financial instruments, investors are faced with greater complexity when making portfolio investment decisions – a point that he affirmed often led to “sub-optimal decisions”.
“The consequences of complexity [mean] people take on less risk and take on less returns,” Silverman said.
“In addition to this, the quality of decision-making degrades.”
According to Silverman, when faced with a more complex portfolio set, Capital Preferences’ research has found that there is a greater tendency for investors to be risk-averse.
“When offered a simple alternative to making a portfolio choice, this option is taken 22 per cent of the time,” he said.
As part of its partnership with PortfolioConstruction Forum, Capital Preferences is expected to launch its Australian product line on April 15 this year.
