Greg Davies: 'Risk required' is not required

Should the return a client ‘needs' to meet their set of goals be a consideration when deciding how much risk to take with a portfolio? It is a tempting thought, it is easy enough to calculate and it certainly sounds plausible. Unfortunately, it is dead wrong. This is not to say a client's goals do not have a role to play in the construction of a risk profile. They do. But they do so because the amount and time horizon of each goal should form part of a comprehensive assessment of risk capacity, and consequently of a risk profile. In other words, a client's goals should already be account...