Rome wasn’t built in a day. You may have encountered this statement before or not. The point here is to understand the financial interpretation of the statement. You can’t make great investment decisions in a jiffy. What the statement means is that your investments need...
All the investment opportunities come with two constants- Risk and reward. A financial advisor’s task is to communicate both to their clients and come up with lucrative investment opportunities for them. As a financial advisor, you know that not all clients are the same. Even if...
Most risk tolerance questionnaires get a bad rap. For many advisers, they are simply a compliance tool to appease the regulator. They add some value, but if it weren’t mandated, they probably wouldn’t use them. This negative mindset is rightly deserved due to the abusive...
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...
We can learn a lot from our neighbours, including how to manage a client's suitability for a certain investments. The U.S., U.K, Canada, Australia and a number of other countries have produced guidelines around client suitability including the use of risk tolerance questionnaires. Below is an overview...
Assessing your clients' risk tolerance and overall risk profile (which includes risk capacity, risk needs and behavioral biases) is essential to building suitable portfolios, running an efficient practice and meeting compliance requirements. But what is the ideal way to do it? Tip: It's not just about...
All financial advisors collect Know Your Client (KYC) information about their clients. Not only is it a regulatory requirement, it's good business. It helps you build a winning investment approach by requiring you to collect your clients vitals. History Of Risk Questionnaires Unfortunately, as KYC requirements expanded in...
It’s almost universally accepted by advisors and prescribed by regulators (e.g. FINRA, FCA, and MFDA) that advisors assess a client’s risk tolerance before recommending investments. Knowing how much risk someone is willing to take is essential in building a suitable plan. However, assessing someone’s risk...
I recently had a discussion on Facebook with two financial advisors about risk tolerance questionnaires. The advisors expressed their frustrations with managing client behaviour. In one advisor’s words “there is an emotional element that is difficult to quantify” in questionnaires. Pocket Risk helps here but...
Pocket Risk is now more mobile friendly for clients completing the questionnaire. Clients can complete the online questionnaire on their mobile devices. This will allow people to complete the questionnaire on the go and avoid the need to use a desktop. Previously it was was possible...