Understanding how your client feels about investment risk and managing their expectations can be key to them maintaining long-term confidence in the solutions you’ve put in place.
Our three-step process (below) supports you through the stages of assessing and discussing your client’s attitude to risk.
Or use our app to do all three steps shown below.
- Our free app (available from iTunes and Google Play) rolls the three steps shown below into one so you can do them all in a single meeting.
- Download the iPad version to compare your client’s risk level against two other levels (rather than one level on the mobile version). A PDF is generated at the end which you can save or share.
Assess risk in three steps
Our investment and retirement RPQs are developed in conjunction with Willis Towers Watson.
Use our risk profiler tool (available on our platform) to translate your client’s RPQ answers into a risk level ranging from 1 to 10.
Our risk discussion tool shows the implied volatility and potential annual returns* for the different risk levels, so you can explain what the rating means to your client.
*The figures generated by the tool are not intended to be, and should not be taken as, a projection of the likely returns.
Compliant and robust risk assessment
The FCA advises against unduly focusing on just the investment risk a client is willing to take while failing to take account of other possible needs and objectives, such as repaying debt and accessing capital. A client’s attitude to risk is also likely to vary depending on their financial goals and the timescale of the investment.
Our process is designed to be flexible around these issues, with the client’s risk score providing a starting point for a more in-depth discussion about their willingness and capacity to accept possible loss, rather than being a definitive and final risk rating.
Once a risk score has been established and agreed with your client, a portfolio can be built with an asset allocation which is optimised for that particular level of risk.