In recent years there has been a plethora of risk tolerance tools releasing features to help advisors acquire more clients. The theory goes by assessing a client's risk tolerance we can know what investments best suit their psychology, a portfolio they will "stick with". However, this...
In Harold Evensky’s “The New Wealth Management” risk is described as a “four-letter word” and that echoes many of the discussions I have had with advisors. Again and again I ask myself how do we get a better grip on what Evensky calls “a client’s most...
Understanding risk tolerance should not be a guessing game especially when dozens of academic studies can point us in the right direction. Below is a list of important academic studies in the field of risk tolerance. Financial risk tolerance revisited: the development of a risk assessment...
There are many risk questionnaires used by financial advisors and the most common appear to be bundled in with software an advisor is already using. Morningstar is a popular tool used by financial advisors for investment research and financial planning. I often get asked my...
I recently read an excellent article by Joe Tomlinson of Tomlinson Financial Planning titled "A Better Way To Measure Risk Tolerance". The article criticizes some of the existing risk tolerance questionnaires that financial advisors use. However, unlike most critiques he actually gave suggestions of how the...
What makes a great risk profile questionnaire? With so many opinions and vested interests its challenging to know what to ask your clients. The FSA certainly has their opinion, so do researchers and clients. We have our opinion and it’s not just a laundry list...