Financial Risk Profiling
Researchers have defined four types of risk tolerance in people: physical, social, ethical and financial.
Imagine yourself in a car that was being driven too fast. How would you feel? Thrilled? Elated? Scared? Anxious?
Now imagine yourself in a car that was being driven too slow. How would you feel now? Safe? Bored?
These are questions about physical risk tolerance.
What’s interesting about risk tolerance is that people tend to behave consistently within the same type risk category. So, hang-gliders are more likely to be mountaineers.
But, risk tolerance in one category doesn’t tend to carry across. So the physical risk-taking, hang-gliding mountaineer may not feel comfortable taking big financial risks .
Assessing Financial Risk Tolerance
The risk profiling system we use has gained international recognition as the best method of assessing financial risk tolerance.
It was developed and trialled over four years with the assistance of the University of New South Wales’ Applied Psychology Unit, and was launched in 1998.
Today, this system is used by leading financial advisers and financial institutions around the world in 7 languages:
- Scientific assessment of your personal financial risk tolerance in plain English
- Uses psychometrics to ensure validity and reliability
- 25-question risk tolerance questionnaire can be completed in 15-20 minutes
Why understand your risk tolerance?
Knowing how much or how little risk you feel comfortable with is a key part of the financial planning process because we can create a more efficient and profitable financial plan for you.
More than simply ‘stocks versus savings,’ we do this so that you feel comfortable, assured and confident in your financial plan.
