Investment Planning Process – Risk Assessment

Risk assesmentOne of the most important parts of a thorough fact find is to assess the level of risk a client is willing to take. What is their risk profile? Risk is subjective and means something different to everyone, so it is important that you establish what risk means to each individual client.

Your risk assessment should explore the client’s general appetite to risk, how much risk they require to meet their investment goals and how much loss they are willing and able to bear in reality. This is often called a client’s risk capacity. The risk capacity can be assessed by exploring the impact of possible losses on their wider financial position.

Risk Profile

Risk Required  |  Risk Appetite |  Risk Capacity

Here are a few key discussion points in relation to your clients’ personal circumstances:

  • How long are they planning to invest for?
  • How much can they afford to lose?
  • How quickly might they need access to the investment?


Understanding investments

Improve your investment planning knowledge by watching the following three videos that introduce suitability, diversification and outsourcing investments.

Importance of diversification

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This video looks at how to measure investment risk, how to reduce risk through diversification and how to diversify a portfolio.

Importance of suitability

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This video looks at the fact finding process, how to determine your client’s risk score and how to read risk profile scores and assess suitability.

Outsourcing investment

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This video looks at which type of outsourcing is suitable for your client, what are Multi Asset Funds, why outsource investment management and what are the benefits of outsourcing.


Support material

Business transition – investment planning options

Business transition

– investment planning options. By Mimi Pienaar

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Download the complete Investment Planning Process module as a PDF

Investment Planning

the seven key areas

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