The best investment strategy is unequivocally the one you can stick with

Understanding Financial Risk Tolerance


Most people cannot immediately describe their attitudes towards risk as it is not something that we generally think about. Clarifying our experiences, feelings and attitudes can guide us to make better financial decisions.

Risk tolerance is a personal trait - partly down to genetics and partly down to life experiences. It is a 'stable' part of our personality, which means that over time we tend to stay who we are. It may, however slowly decrease over time or change after major life events.

The scientific discipline of 'psychometrics', a combination of psychology and statistics, was developed to make personal traits such as risk tolerance measurable. While the science of creating psychometric questionnaires is very complex, the results are simple. The academically driven survey we employ will allow you to get a clear and accurate 'picture' of exactly who you are and where you 'fit' on that scale of very conservative to high risk taker.

Risk Tolerance and Risk Profiling

Our more robust Risk Profiling is a process for finding the optimal level of investment risk for a client by balancing their risk required and risk capacity, both achieved through the planning process, and their individual risk tolerance.


  • Risk Tolerance is the level of financial risk a client is emotionally comfortable with

  • Risk Required is the risk associated with the return necessary to achieve the client's goals from the financial resources available.

  • Risk Capacity is the level of financial risk the client can afford to take.

Oftentimes, there is a mismatch between risk required, capacity and tolerance. We can also help identify these mismatches and resolve them.