Introducing Clients to the Risk Activity

This article outlines some best practices and sample scripts for introducing clients to the Risk Activity. Rather than having clients tell you their risk preferences via a questionnaire, in the Risk Activity clients will show you their risk preferences via the risk vs. reward decisions they make in the activity.

Demo: clients make six risk vs. reward tradeoff decisions at varying levels of investment opportunity.

The key points to convey to clients when introducing the Risk Activity are:

  • This is a gamified activity which will help me better understand your risk preferences so I can further personalise the advice I give you.
  • By analysing your decisions in the activity, I can better understand how much risk you’re willing to take in your investments and ensure that you are in the most suitable portfolio for you and your financial goals.

Here is a sample email script you can use when sending clients a link to the Risk Activity:


Subject: Reveal your risk profile

"Hi, [client],

I’d love for you to complete this short online activity before we next meet—it’ll only take a couple of minutes and will help me gain a deeper understanding of how you think about investment risk.

Launch the activity: [link]

The activity will ask you to make some hypothetical decisions about your comfort with investment risk. It uses economics to understand where you’re most comfortable so that we can discuss and find the right investments for you.

Understanding how you think about risk helps us to better personalise your advice. This is a more modern approach to risk profiling than you may have seen in the past. It’s designed to be more insightful while also being more enjoyable for you.

I’m attaching a short overview in case you’d like to learn more.

[pleasantries]

Thanks,

[adviser]"

You can, of course, include more detail about the Risk Activity and mention that:

In the activity, you are going to make a series of tradeoffs between risk and reward at varying levels of investment opportunity. The decisions you make in the activity answer critical questions, such as:

  •  What is your attitude to risk?
  •  What is your sensitivity to loss?
  •  What portfolio is most suitable for you?

But we find that clients don’t often need more context in order to complete the activity on their own. In a live commercial environment across over 400,000 risk profiles, the Risk Activity has a 95% unaided completion rate by clients.

If clients request more information about the Risk Activity, you can share the following one-pager with them. It gives a brief overview of the purpose, benefits, and insights to be expected from the client going through the Risk Activity.

Did this answer your question?

If not, please feel free to reach out to us at customer-support@capitalpreferences.com