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Risk Profiling

There’s always a level of risk when making an investment on behalf of a beneficiary. A Trustee should know the maximum level of risk acceptable before embarking on any form of investment strategy.

  • What is risk profiling?
  • Why is risk profiling so important?
  • How is the amount of risk measured when risk profiling?
  • How can Adroit Financial Planning help?

What is risk profiling?

Risk profiling helps your adviser to understand a number of important areas; it covers knowledge and experience of investments, attitude to risk and capacity for loss. This assists the adviser to ensure that the recommendation is tailored to the specific needs and circumstances of the Trust.

Why is risk profiling so important?

Risk profiling is an integral part of the investment process as it will ensure that you are making a fully informed decision, that the investment is suitable for your needs and that you are aware of all the possible outcomes.

The profiling exercise covers a number of areas as already highlighted. Most importantly, it forms the basis of an in-depth discussion about different types of risk and how people feel about them. By taking the time to explore this area properly, the adviser will gain a good insight into someone’s thoughts and perspectives as not everyone sees risk in the same way.

How is the amount of risk measured when risk profiling?

Risk profiling measures three areas of risk:

Risk Required: If you’re expecting a return from an investment in order to reach a financial goal.

Risk Capacity: If you can afford to take this level of risk.

Risk Tolerance: If the Trustee is comfortable with this risk

These areas of risk are usually measured by using both specialist financial tools and obtaining a full understanding of the Trustee’s thoughts and concerns.

How can Adroit Financial Planning help?

When Trustees are investing on behalf of a beneficiary, it is a very difficult decision and one which they can often find very worrying, especially when they are aware of the risks that they take.

We’ll ensure we advise you on all those concerns and upon carrying out risk profiling, will provide a full account of all the risks involved and advise you on the best approach.

Where the areas of risk calculated do not match, we will guide you through all the decisions that are required to reach the best possible solution for you.

We’ll ensure that you have a realistic view of all expectations so you feel fully equipped to make a fully informed final investment decision.

Should you require advice from one of our experts, please contact a member of our team on 0800 884 0006 or using the form below:

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