The Problem: A key shortcoming of risk-profiling practices is their failure to capture the extent to which investors' expressions of time perceptions, risk preferences, and economic expectations are influenced by unfounded terminological conventions, unstable correlations, and shaky economic narratives. This can lead to over-commitment to financial assets, resulting in significant losses when such assets are eventually sold under adverse economic conditions. The losses and angst arising from the misalignment between expectations and reality also negatively impact various aspects of the investors' professional and personal lives.
The Solution: We capitalize on a range of AI-based and in-house-developed methods to tailor investor-specific Temporalization Tools that visualize how the investment experience unfolds in time. Our clients engage us to challenge and refine their views on the orders of events in markets and their implications on wealth accumulation and investment objectives. This process helps ensure that the resulting financial investment commitments are robust, fostering a sustainable alignment of expectations between money managers and their clients. While the availability of a clear utility function and risk-aversion level is taken as the starting point in most financial research, Epistemica views the discovery of these factors through different Temporalization Tools as the most consequential dimension of the investment advice. We also create a diverse set of Temporalization Tools designed to support public engagement with financial markets.