Advisers nervous about risk profiling
Institute of Financial Advisers president Nigel Tate said risk profiling is a "hot topic" in the adviser community at the moment, and "the biggest issue appears to be the definition of risk profiling: what constitutes a risk profile?"
He said risk profiling is a "multi-faceted beast" and as well as measuring people's attitudes to risk, advisers also need to try and work out clients' risk capacity, meaning how much risk they can actually afford to take based on their financial situation and savings goals.
"Where advisers are struggling is how do they measure risk capacity?" he said.
A problem, according to Tate, is that while there are a number of different psychometric testing tools available to assess risk tolerance, there aren't many products that help assess risk capacity.
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