Risk profiling is a core element of the financial planning process
Before we can identify the best investment strategy for you, we need to understand your goals and requirements. As a first step we shall work with you to identify the level of risk with which you feel comfortable, when you are considering investing your money.
Our tried and tested, ‘Attitude to Risk’ process is designed to help you understand the potential gains and losses, that a particular financial plan might involve.
Putting your attitude to risk in to context
As individuals we’re all very different, so measuring your attitude to risk compared to another person, needs to be done in a way which is independent, scientific and robust. Above all it must be done in a way that makes it clear to you what the implications would be for your personal financial plan. That is why our process will give you a risk score from 1 (least risk) to 10 (most risk) which acts as the basis for our discussions and will allow you to decide the risk level best suited to you.
Identifying your attitude to risk
The way we work with you
The process we follow has been developed by leading experts and has proved to be simple yet effective. By following the steps, you can be confident that the risk profile we agree upon for you will be accurate and will reflect what you want to achieve from your investments.
We shall ask you to:
Risk is not for everyone
Not everyone is comfortable with the possibility of incurring investment losses. If you feel that you are not prepared to accept any investment risk you should consider something very low risk such as a cash based investment. It is important to remember however, that the real value or purchasing power, of your investment is likely, over time, to be eroded by inflation.
Higher Risk Investments
If you are a very experienced investor and have a high risk tolerance, you may want to consider investing in a more aggressive portfolio. These investments which may include holdings such as single company shares are very high risk. You could lose some or all of your money and there may be other associated liquidity risks. Although there is also potential for greater gains.
Balancing your risk