Greg Davies: Combatting the risk of risk mismanagement

As a supplement - or possibly, in some more care-free circumstances, a substitute - to a psychometric assessment of risk tolerance, an adviser may sketch a chart like the one below and then invite an investor to say which path they would prefer to be on. Source: Oxford Risk. For illustration purpose only The way a chart like this is usually presented ensures everyone picks B and - hey presto! - everyone is ‘medium risk' (give or take a leaning towards A or C that define the upper and lower bounds of medium). This has the advantage of matching what we know about risk tolerance - tha...