Assessing a Client's Risk Profile: A Review of Solution Providers
Date
2017-01
Journal Title
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Publisher
The Journal of Financial Service Professionals
Abstract
The purpose of this paper is to provide financial
advisors with an overview of the different
ways a client’s risk profile can be measured
and assessed. The paper begins by providing
a definitional framework to help financial
advisors better understand the similarities
and differences between and among concepts
such as risk tolerance, risk preference,
risk need, and risk profiling. Next, information
based on interviews of representatives
from several risk profiling firms is presented.
Based on these interviews and an assessment
of each firm’s risk profiling methodology,
risk profiling tools are classified as being
(a) comprehensive, (b) subjective, or (c) asset
allocators. Guidance on the use of risk profiling
tools is provided, as well as a discussion
about the need for more policy guidance on
the topic of risk assessment.
Description
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Article
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Keywords
finance, financial planning, risk profile, policy guidance, risk managment