The investment profile questionnaire has been designed to assist your financial planner to assess your risk tolerance in relation to financial risk. The results of the questionnaire are to be used as a guide for your financial planner in addition to other information in regard to your personal circumstances to develop appropriate recommendations.
Once your financial planner has assisted you to identify your risk tolerance it will be used in conjunction with other information such as your objectives, personal financial situation and other relevant personal information to develop recommendations to achieve your goals.
An individual’s risk tolerance is an important factor in making investment decisions and may also be used in other contexts such as risk insurance, risk management etc.
The most important factor in making investment decisions is to have an understanding of the risks involved in making such decisions. Financial or investment risk is generally defined as the risk that the investment decision may not meet expectations or not achieve an individual’s stated objectives. Risk tolerance is a measure of an individual’s level of comfort in relation to investment or financial risk.
The investment profile questionnaire
Risk tolerance testing is not only a measure of an individual’s psychological aspects towards financial risk, but considers many other factors that are predictors of an individual’s risk tolerance.
The question segments cover the following areas:
· General investment knowledge.
· Measurement of psychological aspects such as attitudes to investment, emotions, personal beliefs and knowledge levels.
· Hypothetical situations.
· An individual’s locus of control (an individual’s perceived ability to control their future).
· Past experiences.
· Attitudes towards different types of risk.
· An individual’s views on investment time frames.
How do I answer the questionnaire?
The questions have been provided to you in a multiple-choice format. Please provide only one answer to each question. As you have a limited choice of answers, you may find that none are your preferred answer to a particular question. Please do your best to select an answer from those available.
Why are so many questions required?
The number of questions is required in order to provide an accurate assessment of your risk tolerance. As we explained above, there are many different individual aspects or risk tolerance predictors that need to be measured.
How do I answer questions that contain hypothetical situations?
There are questions in the questionnaire that are based on hypothetical situations. These questions are designed to assess how you may react in a similar situation, even though you may not have been in this situation. Please do your best to imagine the situation and provide an answer.
The Role of Your Financial Planner
Your financial planner will use your risk tolerance assessment in addition to other personal information to develop appropriate recommendations. Your risk tolerance report is designed to assist your financial planner in satisfying their legal requirements including the “best interests duty”. Section 961B (1) of Corporations Act 2001 requires financial planners to identify the “objectives, financial situation and needs of the client that would reasonably be considered as relevant to advice sought”. This is dealt with further under ASIC Regulatory Guide 175. As your risk tolerance will change dependent upon your experiences and further education your financial planner may also reassess your risk tolerance periodically.
This investment profile questionnaire is based on the IRESS Risk-Profiler questionnaire. The Department of Econometrics and Business Studies at Monash University has publicly endorsed IRESS Risk-Profiler as an appropriate method for assessment of an investor’s investment risk grouping. Monash University has conducted statistical analysis of the results obtained by the product and has confirmed that the results meet a high degree of measurement accuracy. Monash University will continue to be involved with the on-going development of IRESS Risk-Profiler. The report has been prepared on the basis of and in reliance on information supplied in response to the IRESS Risk-Profiler questionnaire. IRESS Wealth Management Pty Ltd (ABN 67 095 619 837) cannot guarantee the accuracy or validity of the risk tolerance assessment or the information entered into the questionnaire. The financial planner providing any general or specific advice must provide an assessment of the client’s financial situation in compliance with the Corporations Act 2001 (Cth), regulations and legislative requirements including the Privacy Act 1988 (Cth). IRESS Wealth Management Pty Ltd does not accept any liability, whether direct, indirect arising from the use of information contained in this report. You agree to defend, indemnify and hold harmless, IRESS Wealth Management Pty Ltd or any of its subsidiary companies and their employees, contractors, agents, affiliates, directors and officers from any and all third party claims, demands, liabilities, costs or expenses, including any legal fees (on an indemnity basis) arising from or in any way relating to or arising out of any damage or loss of any nature whatsoever that results, directly or indirectly, from yours or any other persons reliance or use of this reporting whatsoever. ©Copyright 2008, IRESS Wealth Management Pty Ltd ABN: 67 095 619 837. The material contained in this report is subject to copyright and may not be reproduced without permission of the owner.