Attitude to Risk Questionnaire – Where do you lie?

Risk profiling is a process for finding the optimal level of investment risk considering your attitude to risk, capacity to risk, and your tolerance to risk;

  1. Attitude to Risk is the risk associated with the return required to achieve your goals from the financial resources available.
  2. Capacity to Risk is the level of financial risk the client can afford to take.
  3. Tolerance to Risk is the level of risk the client is comfortable with.

The profiles are as follows –

Level 1. Very Cautious / No Risk:
You would prefer to have very little investment in the stock market, or other volatile investments. You are therefore prepared to accept the risk that your investment values may be eroded by inflation over time, that long-term returns are likely to be lower than could be achieved if you were willing to accept higher levels of volatility.

Level 2. Cautious / Low Risk:
You would prefer to have most of your investments in assets other than equity and alternative investments to equity to provide a less volatile investment portfolio especially in the short-term. You are nevertheless happy to have some stock market investment to provide some inflation protection and potential for long-term returns.

Level 3. Low to Medium Risk:
You would still prefer to have most of your investments in assets other than equity and alternative investments to equity to provide a less volatile investment portfolio especially in the short-term. You are nevertheless happy to have a reasonable proportion of your capital in stock market investment, or similar risk investments, to provide inflation protection and potential for long-term returns. You accept that you may get back less than you put in.

Level 4. Medium Risk:
You would like to take advantage of equity or similar risk assets to benefit from the potential returns and inflation protection offered. However, you are also concerned that your investments are not too volatile. You therefore still wish to reduce short-term volatility by investing a proportion of your capital in a diversified range of assets. You accept that you may get back less than you put in.

Level 5. Medium to High Risk:
You would like to maximise long-term returns and inflation protection by investing a considerable proportion of your capital in volatile investments such as equity or similar risk assets. However you still wish to reduce any volatility by diversifying across a range of risk assets. The objective is to provide growth over the medium to long term (at least 5 years) by investing in more complex structures, due to the nature of these investments there are greater risks and you may get back less than you put in.

Level 6. High / Adventurous Risk:
You are willing to accept considerable capital volatility and/or risk of losing money in order to gain potentially higher returns. You are not overly concerned about reducing short-term volatility by investing in lower risk assets. You are looking to maximise returns with limited concern for volatility.

                                                                      1 —- 2 —- 3 —- 4 —- 5 —- 6

                                                   Where do you lie on this risk profile assessment?

Please contact one of our trusted advisers for more information. Your risk appetite will vary through your life cycle, and this is where our expertise can assist you, to ensure you achieve your goals.