Why is the Risk Activity Trade-Off Over the Next Twelve Months?

We know from our research that a client’s risk preferences change over time. This happens naturally as clients age and as major life events occur, such as buying a home, starting a family, switching jobs, and so on.

However, individuals feel the pain of losses in the near term. The Risk Activity is designed to understand each individual’s unique risk preferences in the context of short-term investment outcomes, even if clients are not seeking to withdraw their money for a longer period of time.

This is because clients cannot express what their risk preferences will be five, ten, or twenty years down the road. They can only express how they feel about investment risk and return in the present moment.

We there recommend re-profiling your clients’ risk preferences annually to see how their Risk Comfort evolves so that you can continually personalise the advice you provide over time.

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