Risk profiling: Should we talking about volatility with clients?

There is a lot of talk about increasing financial education in schools to help people better manage their finances as adults, but it is likely to be to little effect unless it includes a thorough examination of the notion of risk. Lesson one on day one of the course should start by looking at how the financial industry measures risk and how far that is from the ordinary person’s intuitive grasp of the concept. There is a danger of miscommunication on the matter and one of the crucial jobs for advisers right now is to help make sure this does not happen. Because of the way the industry...