A third-party measure of a client's willingness and ability to take risk is a vital part of most advisers' toolkits, writes Adam Higgs, but what should advisers be looking for in such tools and how do they differ?
It is fair to say risk-profiling has withstood some considerable regulatory scrutiny since the then Financial Services Authority released its first Assessing Suitability paper. For most advisers, a third-party tool to help measure a client's willingness and ability to take risk is a vital component in their armoury, but what are the things advisers should be looking for in such tools and how do they differ? A good risk-profiling process will broadly assess three factors to arrive at a risk profile that can be mapped to a suitable investment strategy. These are the client's willingness to...
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