Independent financial adviser to personal and corporate clients

Risk Profiling

Risk Profiling is a very important extension to the factfinding meeting. Most people tend to think of investment risk (the risk of capital loss) in simple black and white terms, i.e. “it’s either safe or it’s risky”.

Unfortunately investment risk is not that simple, if it were we would all simply avoid the “risky” investments and only put our money in the “safe” ones.

The reality is that investment risk covers a wide spectrum of different risk levels. At one extreme we have very low risk with possibly low returns and at the other extreme we have very high risk but with potentially very high returns. For each investor there is a point between these two extremes where that investor is happy with the level of risk taken and also happy with the level of return being achieved.

The process of determining an appropriate risk level for a client is known as risk profiling. We use a specially designed questionnaire that seeks to analyse your responses to questions asked relative to your existing assets and liabilities. The result will be a score numbered somewhere between 1 and 10, with 1 being the most risk averse and 10 being the most risk seeking.