What else will I need to do to ensure compliance?

  • Identify clients who are not willing to take any risk with their income. The risk questionnaire is designed to assess the attitude to risk of individuals. An additional process will be needed to identify where there is no ability or willingness to accept any income loss. For example, an investor may be willing to invest but not have the financial freedom to do so. It would help if you also considered that there are other types of risk that an investor is exposed to, such as not meeting a goal which will increase with inflation, liquidity or diversification.
  • Take account of the investor's investment objectives and capacity to take the risk. The risk questionnaire provides the starting point for discussing the level of risk that an investor is prepared to accept. However, how this is implemented will vary by their objective, time horizon and potentially also change over time. Other types of risk need to be considered. We consider a stochastic forecast to be a useful method of explaining the risks to investors. It shows a personal forecast relevant to the choices and characteristics of the product and funds. It also provides figures around the level of risk that is being taken.