Having agreed a client’s attitude to risk, you need to construct a portfolio to help deliver the investment outcomes they expect.
Effective portfolio construction involves understanding clients’ investment goals along with their attitude to risk, and then choosing appropriate investments for them. One of the most important decisions when constructing a portfolio is asset allocation. This means making sure the portfolio has the right mix of assets to suit each customer and their investment goals and attitude to risk. You also need to regularly review the selection to ensure that the portfolio continues to reflect how these needs can be met in changing market conditions.
Building portfolios requires a lot of knowledge and experience. There are tools such as model portfolios that can be used to help determine the basic building blocks of the portfolios. The risk-return profile will determine this at a very high level, but you should not overlook the importance of diversification at asset allocation level.