Assessing a client’s risk tolerance and capacity for loss is not only a regulatory requirement, it is an important aspect of delivering the best client outcome.

We recognise a lingering concern among advisers that many existing risk profiling tools on the market are not fit-for-purpose. Not only do they lack robust foundations, they often ask leading questions, have a flimsy approach to assessing risk capacity and conflate volatility and risk, thereby actively discouraging equity risk-taking in a way that is damaging to the long-term objective

of most clients.