Whatever your goals, we want to be sure that the investment strategy we recommend for you is in line with your attitude to investment risk.   To establish your attitude to investment risk, we ask you a series of questions. Each answer produces a score and these are then aggregated to calculate your specific level of tolerance for risk, from 1 (low) to 10 (high). We call this your risk profile score.

Many of the terms commonly used to describe attitudes to investment, such as ‘cautious’, ‘balanced’ or ‘aggressive’ can mean different things to different people.   That’s why we aim to make our assessment of your attitude to risk as objective as possible. And that’s why the next stage of the process is a discussion about what your risk profile score means. Your resulting risk profile score is an indication of the extent to which you are prepared to accept a short-term fall in the value of your investments as markets go through their ups and downs.

To do this we need to consider a number of factors. They include:

  • The length of time you want your investment to last – its ‘term’
  • Cash reserves you have available to meet the unexpected
  • Your view on the potential for your earnings to grow
  • How much money you want to invest
  • Your debts
  • Existing savings for retirement
  • Your overall view on investing
  • Your goals – do you really need to take on risk to achieve them?
  • The impact of short-term falls in the value of your investments
  • The importance of protecting your investment from inflation
  • If you want to cash in your investments, how easy will it be to get your hands on your money?

These fluctuations in the value of investments are also known as their volatility. If your score is 1, then low volatility investments such as cash or bank deposits could be the resulting investment recommendation. If your score is 10, then we might recommend a portfolio which includes investments in asset classes such as emerging markets, whose higher expected volatility is matched by greater growth potential.

Before proceeding to make recommendations based on your score, we want to be sure that you understand what that score number means and what its implications are. We will tell you how investment gains and losses might differ between different risk levels, to give you a better idea of the outcome you could expect at each level.

If you hire and pay for our ongoing, optional service, we will carry out the process each year at the annual review stage to ensure that your circumstances have not changed and that your attitude to risk remains the same.

Before you commit to any investment, we provide documentation that amplifies fully on your chosen investments and the risks that are peculiar to them in particular, and investing in general.