What is risk profiling and why does it matter?

The Dynamic Planner risk profiling process has been used by financial planning firms since 2005, to help identify both their clients’ attitude to risk and how much risk they can afford to take.

It is suited to the majority of individual adult UK investors and their partners. For those with significantly large investable assets, additional factors need to be taken into account, such as properties or privately held company shares that are significantly large in value.

There are six steps to assessing an investor risk profile which financial planners typically follow.

 

  1. Review existing portfolio
  2. Assess attitude to risk
  3. Check consistency of answers
  4. Assess capacity for risk
  5. Confirm value at risk
  6. Match portfolio against goals
Web Profiling Process Diagram

These steps help to build a deeper insight into your requirements and ensure that the final outcome is an accurate and fair reflection of your risk profile as well as capacity to tolerate possible losses.