Investor+Risk+Profile

8/6/2019 Investor+Risk+Profile

1/21

Investor Risk ProfileInvestor Risk Profile


2/21

Investor Risk ProfileInvestor Risk Profile

Your attitute to risk is probably the mostYour attitute to risk is probably the mostimportant factor to consider before investingimportant factor to consider before investingRisk/ return trade off Risk/ return trade off Higher returns = Higher risk of capital lossHigher returns = Higher risk of capital loss Funds and assets that offer higher returns areFunds and assets that offer higher returns are

generally more volatilegenerally more volatile

As a financial advisor you will recommend to As a financial advisor you will recommend toyour client investment strategies to match their your client investment strategies to match their investments to their risk profileinvestments to their risk profile


3/21

7 steps of personal financial advice7 steps of personal financial adviceStep 1Step 1- - Establish a relationship with the clientEstablish a relationship with the clientStep 2Step 2- - Identify the clients personal needs,Identify the clients personal needs,goals and expectationsgoals and expectations

Step 3Step 3- - Research and analyse client situationResearch and analyse client situationStep 4Step 4- - Develop Statement of Advice detailingDevelop Statement of Advice detailingrecommendationsrecommendationsStep 5Step 5- -Present advice, negotiate and seekPresent advice, negotiate and seek

agreementagreementStep 6Step 6- - Implement agreed planImplement agreed planStep 7Step 7 -- Provide ongoing services as requestedProvide ongoing services as requested


4/21

Step 2Step 2- - Identify the clients personal needs,Identify the clients personal needs,goals and expectationsgoals and expectations

Risk ProfileRisk Profile


5/21

DiversificationDiversification

Investing across the various investment sectorsInvesting across the various investment sectorsaccording to your risk profileaccording to your risk profile

Eg Instead of inveting only in shares or only in property youEg Instead of inveting only in shares or only in property youmight invest a proportion in both, or even include cash or might invest a proportion in both, or even include cash or

fixed interest to create a balanced portfoliofixed interest to create a balanced portfolio

Information required to determine theInformation required to determine theappropriate mix of assets to invest in you needappropriate mix of assets to invest in you needto know the following:to know the following: Risk profileRisk profile Investment GoalsInvestment Goals TimeframeTimeframe


6/21

Assessing your attitude to risk & Assessing your attitude to risk &what investments are bestwhat investments are best

suited to yousuited to you


7/21


8/21

Question 2 Question 2 I am willing to accept more risk to possibly achieve higher I am willing to accept more risk to possibly achieve higher

returns and reach my goalsreturns and reach my goals

ScoreScore Client 1Client 1 Client 2Client 2 JointJointScoreScore

11 StronglyStrongly

DisagreeDisagree22 DisagreeDisagree

33 NeutralNeutral

44 Agree Agree

55 StronglyStrongly Agree Agree


9/21

Question 3Question 3If you had an investment Portfolio, how often would you reIf you had an investment Portfolio, how often would you re- -

arrange it?arrange it?

ScoreScore ClientClient11

Client 2Client 2 JointJointScoreScore

11 Any loss of value Any loss of value

22 Less than 3 yearsLess than 3 years

33 33--5 years5 years

44 Whenever myWhenever myinvestments go upinvestments go upsignificantlysignificantly

55 5 years or more5 years or more


10/21


11/21

Question 5 Question 5 Which of the following best describes your attitude toWhich of the following best describes your attitude to

financial riskfinancial risk


11 A very low risk taker A very low risk taker

22 A low risk taker A low risk taker

33 An average risk taker An average risk taker

44 A high risk taker A high risk taker

55 A very high risk taker A very high risk taker


12/21

Q uestion 6Q uestion 6Which statement best describes your understanding of Which statement best describes your understanding of

financial markets and investmentsfinancial markets and investments


ClientClient22

JointJointScoreScore

11 I am not familiar and have little interestsI am not familiar and have little interestsin themin them

22 I am not very familiar I am not very familiar

33 I have had enough experience toI have had enough experience tounderstand the importance of understand the importance of diversificationdiversification

44 I understand that markets may fluctuateI understand that markets may fluctuateand that different market sectors offer and that different market sectors offer different income growth and taxationdifferent income growth and taxationcharacteristicscharacteristics

55 I am experience with all investmentI am experience with all investment

sectors and understand the varioussectors and understand the variousfactors that influence performancefactors that influence performance


13/21

Question 7 Question 7 M y main concern is security. Keeping my money safe isM y main concern is security. Keeping my money safe is

more important than earning high returnsmore important than earning high returns


11 StronglyStrongly

Agree Agree22 Agree Agree

33 NeutralNeutral

44 DisagreeDisagree

55 StronglyStronglyDisagreeDisagree


14/21

Question 8 Question 8 How do you normally feel after you have made a significantHow do you normally feel after you have made a significant

financial decision?financial decision?


ClientClient22


11 Very concernedVery concerned

22 ConcernedConcerned33 A little uneasy A little uneasy44 Content that I have madeContent that I have made

the right decisionthe right decision55 Optimistic that theOptimistic that the

decision Ive made willdecision Ive made willprovide substantialprovide substantialbenefitsbenefits


15/21

Question 9Question 9Investments that have experienced high volatility have generally compensatedInvestments that have experienced high volatility have generally compensated

investors with higher returns over the long term. If you could invest in a portfolioinvestors with higher returns over the long term. If you could invest in a portfolio

between 10 and 20 years, which of the following would most suit you?between 10 and 20 years, which of the following would most suit you?ScoreScore ClientClient

11ClientClient22


11 A portfolio that may have a A portfolio that may have a ve return everyve return every15 years but a range b/w 0.2% and 9.1% pa15 years but a range b/w 0.2% and 9.1% pa

22 A portfolio that may have a A portfolio that may have a ve return every 8ve return every 8years but a range b/wyears but a range b/w - -1.1% and 12.01% pa1.1% and 12.01% pa



55 A portfolio that may have a A portfolio that may have a ve return everyve return every4years but a range b/w4years but a range b/w - -4.2% and 18.9% pa4.2% and 18.9% pa


16/21

Total ScoreTotal Score

1.1. Add Up totals for each question and write Add Up totals for each question and writethe total for each client or for joint asthe total for each client or for joint asappropriateappropriate

2.2. According to the following information, According to the following information,what is your risk profilewhat is your risk profile


17/21

Your scoreYour score your risk profileyour risk profile

3838--45 Aggressive45 Aggressive A very high risk taker A very high risk taker

Prepared to compromise portfolio balance toPrepared to compromise portfolio balance topursue potentially long returnspursue potentially long returns

Investment choices are diverse, but carry withInvestment choices are diverse, but carry withthem higher level of riskthem higher level of risk

Security of capital is secondary to potential for Security of capital is secondary to potential for wealth accumulationwealth accumulation


18/21


3131--37 Moderately Aggressive37 Moderately Aggressive A high risk taker A high risk taker

Earning sufficient income to invest more fundsEarning sufficient income to invest more fundsinto capital growthinto capital growth

Prepared to accept higher volatility andPrepared to accept higher volatility andmoderate risksmoderate risks

Primary concern is to accumulate assestsPrimary concern is to accumulate assestsover the medium to long termover the medium to long term

Require a balanced portfolio, but investmentsRequire a balanced portfolio, but investmentsthat are more aggressive may be includedthat are more aggressive may be included


19/21

Your scoreYour score your risk profileyour risk profile2 42 4--30 Balanced30 Balanced

An Average Risk Taker An Average Risk Taker Balanced investor Balanced investor

Diversified portfolio to work towards medium ti longDiversified portfolio to work towards medium ti long- -term financial goalsterm financial goals

Required to work towards medium to to long termRequired to work towards medium to to long termfinancial goalsfinancial goals

Require an investment strategy that will cope with theRequire an investment strategy that will cope with theeffects of tax and inflationeffects of tax and inflation

Calculated risks will be accepted to achieve goodCalculated risks will be accepted to achieve goodreturnsreturns


20/21


1717--2 3 Moderately Conservative2 3 Moderately Conservative A low risk taker A low risk taker

Seek better than basic returnsSeek better than basic returns Low riskLow risk Typically older investor seeking to protectTypically older investor seeking to protect

wealth accumulatedwealth accumulated M ay be prepared to consider less aggressiveM ay be prepared to consider less aggressive

growth investmentsgrowth investments


21/21


99 --16 Conservative16 Conservative A very low risk taker A very low risk taker

Risk must be very lowRisk must be very low Prepared to accept lower returns to protectPrepared to accept lower returns to protect

capitalcapital Not concerned about the negative effects of Not concerned about the negative effects of

tax and inflation as long as the initialtax and inflation as long as the initialinvestment is protectedinvestment is protected

Investor+Risk+Profile

Documents