Once you have identified the right product for your client, you should assess the client’s attitude to investment risk.
To help you determine the level of investment risk appropriate for your client's investment goals and timescales, you can use our risk profile tool available through our extranet sites (Wealth Interactive and Insite) or via our free mobile app. You can use our questionnaire or use your own risk questionnaire.
Our tool translates your clients’ answers on investment risk into a single number – a ‘client risk score’, ranging from 1 to 5. Once you have logged into the extranet sites, click on ‘Risk Profiler’ to to find out how the Old Mutual International Risk Profiler works.
A client’s risk score is not meant to be treated as a definitive and final risk rating. Its purpose is to provide a starting point for a more in-depth discussion with the client about their attitude to risk and their willingness and capacity to accept possible loss.
The client’s attitude to risk may vary depending on their financial goals and the timescale of the investment concerned. A liability-driven objective, such as school fees, may require more certainty about potential returns. Please read the next section about discussing risk with your client.
Once you have determined your client’s initial risk rating, it’s important to explain what the rating means and discuss its implications, so that you can ensure they invest at a level of risk they are both willing and able to take. It is important that you don’t focus on just the investment risk a client is willing to take. You should also take into account the client’s other possible needs and objectives, such as repaying debt or potential need to access capital.
Once a risk score has been established and agreed with your client, a portfolio can be built with an asset allocation which is optimised to provide the maximum expected return for that particular level of risk.