Five tips when assessing client capacity for loss

FULL CAPACITY

Nicola Brittain
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Assessing client capacity for loss is notoriously difficult. Here Caspar Rock, chief investment officer at investment company Architas, provides five top tips for advisers.

The tips follow a recent discussion on capacity for loss attended by the Association of Professional Financial Advisers (APFA) and Unbiased.co.uk 1. Capacity for loss should be considered as a distinct part of the fact find process, separately from attitude to risk. 2. Advisers should consider non-financial issues such as lifestyle and wellbeing, which may also impact a client's propensity to withstand losses. 3. Cashflow planning is a good way of demonstrating to consumers the effect of losses on their future financial situation. 4. Capacity for loss should be reviewed on a re...

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