Investment research firm Morningstar extended its push into financial advice technology with the purchase of Canadian financial planning software firm PlanPlus Global, which owns and operates the ubiquitous Finametrica risk profiling tool.

Morningstar has made no secret about its intention to carve a firm niche in the advice provision space, with Scott Mackenzie, president and CEO of Morningstar Canada, calling the purchase “an investment for growth in financial planning area”.

Finametrica Profiler, the flagship product of the firm, will continue to be offered worldwide as a standalone tool but is also set to be integrated into Morningstar’s existing advice service capabilities. The software’s psychometric risk tolerance assessment tool is one of the most widely used in advice globally, with 1.5 million tests completed globally in 35 countries since 1998.

The program has come under criticism from academics at Santa Clara University, however, who questioned the efficacy of questionnaires in reporting “risk tolerance, regret, overconfidence and other investor propensities” in a 2012 paper.

“Typical risk questionnaires aimed at helping advisors guide investors are deficient in five ways,” the paper begins.

The PanPlus Global transaction comes on the heels of the research firm’s December 2019 purchase of Australian financial planning software firm AdviserLogic, which reported a “loyal client base” of 1500 independent financial advisers across about 550 practices at the time.

AdviserLogic provides a suite of products including a core financial planning software platform, a revenue management software and what Morningstar calls a “data aggregation engine”.

Morningstar also purchased investment publishing platform firstlinks.com.au, formerly known as “Cuffelinks”, in October 2019.

Financial terms were not disclosed for any of the three transactions.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at tahn.sharpe@conexusfinancial.com.au
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