Assessments in The Client Experience

How should you decide on what tests to include in your client experience? Here are a few things to consider.

  1. Understand what the test measures and its intended purpose. This should be made clear by the test provider. Is it really measuring risk personality, or risk preferences? Is the test measuring personality or attitudes? Understanding what the test measures helps you in determining which assessment is appropriate for your practice, but also allows you to explain its importance to your clients. Likewise, is the test intended to predict something or describe something? What’s intended use?
  2. Select assessments that fit your clients. Asking clients with a lifetime of experience in financial planning to take a test on the basics of financial management doesn’t make much sense. It also doesn’t make sense to ask clients who have little or no experience with investing to answer questions about the risk associated with their current stock portfolio. One size may not fit all depending on your clients.
  3. Pay only some attention to the individual items. At the very least, we like taking tests that feel like they are measuring what we think they are measuring. This is called “face validity.” So, at a minimum, the test you choose to use with your clients will generate better reactions if the questions appear to focus on financial or related areas. Likewise, make sure that your clients will be able to understand the questions: think about a client that has little numeracy skills and little to no experience with managing her finances: will that client be able to understand the questions on the test?
  4. Appreciate psychometrics. Likewise, good test publishers have the goal of publishing tests that meet standards of reliability and validity (see below) in the most parsimonious (read: shortest) way. Some advisors hone in on one question in a test, and wonder why it’s included or are concerned that it appears to ask the same thing as another but in a different way. If the test is well constructed, each question and each question’s response has been analyzed, and there is a statistical reason that the question is included in the test.
  5. Instead, focus on the technical elements of the test as a whole. What research led to the creation of the test? Who constructed the assessment? What evidence is available of its reliability and validity? For what purposes can/should the test be used? If the test provider can’t provide a technical report or can’t answer those basic questions, consider moving on.

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