Tools of the Trade: Tools to Know Your Own Personal Risk


By Christopher Pugh, Fall 2014 Student Intern

meterFor National Consumer Protection Week, we have focused on several tools to spot scams and fraudsters as well as tools to educate consumers. But an important part of being an informed consumer is to have some level of self-awareness. That is, knowing what characteristics about yourself make you more vulnerable to certain types of scams, or more likely to make bad financial decisions.  Financial self-awareness is just understanding where you are vulnerable to remove fraudsters’ ability to make you a victim.  Fortunately, there are some helpful tools to determine what these weaknesses are and how to guard against them.

Again, our friends at FINRA have been busy creating tools to highlight our vulnerabilities before we make investment mistakes. Use the FINRA Risk Meter to see whether you share characteristics and behavior traits that have been shown to make some investors vulnerable to investment fraud. The Risk Meter can identify areas in your financial armor where fraudsters are likely to attack, and educate you on how to thwart such attacks.  The tool ask you a series of questions about financial orientation and then gives you an analysis of your risk level.

Once the Risk Meter has identified some vulnerable areas, you can use other handy tools to educate yourself about the options available to you as a consumer. For example, if the meter shows you might be vulnerable to a mortgage refinancing scam, then you could use FINRA’s mortgage calculators to compare offers and to determine what a fair mortgage might look like. Additionally, FINRA has a great Fund Analyzer to help investors make informed decisions on mutual funds.  The Fund Analyzer offers information and analysis on over 18,000 mutual funds, Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs). This tool estimates the value of the funds and impact of fees and expenses on your investment and also allows you the ability to look up applicable fees and available discounts for funds.

The lesson from this week’s blog posts is that no matter what challenges consumers face in making informed financial decisions, there are tools that can educate consumers and help them analyze their own financial choices. To see more available consumer protection tools visit the FINRA Investor Education Foundation’s Financial Tools website.