Fill out the questions in the risk questionnaire with your client. They are designed to elicit their true risk profiles. These questions consider three approaches to assess attitudes toward risk:
Time Horizon
Knowing the time horizon allows us to get a handle on the client’s approximate age and when the expected goal must be reached. This is the initial step in discovering where your clients are concerning their investments. Time horizon is a key factor in establishing a risk profile for the portfolio, since longer time horizons may afford greater opportunity to overcome short-term risks with long-term reward.
Long-term Goals and Expectations
This gives us an overall picture of how variables may affect your client’s investments, attitudes toward long-term risk and volatility, and their reaction to ideal yet realistic scenarios that your clients may see in future investments.
Short-term Risk Attitudes
Like long term goals, short-term risk attitudes deal with your client’s expectations of their investments and future inevitabilities. However, short-term risk attitudes concern a relatively shorter block of time from now until three years from now, for example. Focusing on short-term risk provides a perspective on how clients will feel and behave when faced with market realities on a day-to-day basis.
Results
Once all of the client responses have been entered into the on-screen Risk Questionnaire, click OK to move to the Risk Profile screen with the results. We’ll score your client’s responses and determine their overall risk tolerance: Very Conservative, Conservative, Moderate, Moderately Aggressive, or Aggressive.
Tip: You can print out a blank questionnaire to present to your client. Within a client record, in the left navigation pane, click Risk Profile. On the toolbar, click Print Blank Questionnaire. Adobe Acrobat will open and generate a printable one-page report. Click the Print icon.