How to beat RDR six-love: A practical guide to customer risk profiling

Step 1 Psychometric risk questionnaire Step 2 Scoring algorithm Step 3 Initial risk profile assessment Step 4 Capacity for risk assessment Step 5 Stochastic forecast Step 6 Investment recommendation   The FSA’s recent Guidance Note on establishing a customer’s risk tolerance and the suitability of an investment recommendation identified a number of serious shortcomings in the processes of many advisers. While the FSA’s analysis was generally good, it was short on practical suggestions, leaving the “difficult stuff” for the industry to work out. A process which ...