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Introduction
Many financial decisions are made in situations of uncertainty, and so risk is involved. Different people are comfortable with different levels of risk. A person's risk tolerance is the level of risk with which he or she is comfortable.
The whole issue of risk is a difficult one. Risk aversion prevents many of us from doing as well as we might financially. Yet some of life's most unpleasant financial surprises arise because we were exposed to a level of risk beyond our comfort zone. It can be equally disappointing to miss an opportunity because someone else wrongly assumed we would not be willing to take the risk involved.
Unlike, say, height or weight, there is no unit of measurement for risk tolerance. A person's risk tolerance can only be measured relative to others on a constructed scale, in much the same way as IQ is measured. Additionally, even the meaning of "risk" can depend on the situation. When individuals talk about "risk" as they experience it in their personal financial affairs they are not talking about the same thing as, for example, investment researchers discussing the "risk" of an investment.
So, investors face a double challenge,
- first, in making an accurate and meaningful assessment of their willingness to accept risk as they perceive it, and
- secondly, in expressing this assessment in such a way that both what they already have in place, and the alternatives now on offer to them, can be evaluated in terms of their risk tolerance.
The FinaMetrica Personal Financial Profiling system assists investors and their advisers in meeting this challenge. Developed in conjunction with the University of New South Wales’ Applied Psychology Unit, it exceeds international standards for tests of this kind.
In the questionnaire, you are asked about your attitudes, values and experiences. Your answers are scored against the system's database and used to produce a detailed report. The questionnaire takes about 15 minutes to complete.
Please complete the registration details below and then proceed with the questionnaire. |
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FinaMetrica respects your privacy and complies with the National Privacy Principles under Commonwealth legislation. FinaMetrica’s full Privacy Statement can be found at: http://www.riskprofiling.com. |
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What if the situation described in a question has never happened to me, or will never happen to me?
There are a number of questions that ask you to assume or imagine you are in a certain situation. These questions are designed to gain a picture of what you would do in such circumstances, regardless of whether you have ever been in them or are ever likely to be in them. Please answer as best you can on the available information.
What if a question asks about a situation where, in real life, I would have (or would seek) more information than is given in the question?
Some questions require you to make a decision based on limited information. While, in real life, you may wish to obtain more information before making your final decision, these questions are designed to gain an idea of what you would do given the limited information. Please answer as best you can on the available information.
What if none of the choices in a multiple-choice question is my preferred answer?
Some questions give you a limited choice of responses and may not include what would be your preferred answer. These are designed to obtain a picture of what you would do given the choices available. Please answer as best you can on the available choices.
Do the questionnaire and report replace discussion between client and adviser?
Not at all. They act as catalysts to, and provide an objective starting point for, a more informed, more focussed discussion. Advisers experienced in using the FinaMetrica system report that the improved communication leads to clearer instructions from clients and greater understanding, by both client and adviser, of clients’ attitudes to risk |
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