The risk triangle

Part of my job involves communicating how we work out the level of risk a client should take with their money. We think about three key areas:

  • Willingness to take risk – how much risk can they tolerate or do they want to experience
  • Capacity for loss – what level of losses could they afford to experience without having a material impact on their wellbeing or achieving their goals
  • Need to take risk – do they need to take a risk, how much risk do they need to generate the returns that they need

I like to think of these as three sides of a triangle with our client in the middle. We try to find a solution or a compromise which satisfies all three areas.

In the September issue of Professional Paraplanner I explain this in more detail: http://viewer.zmags.com/publication/f5f5f0fc#/f5f5f0fc/14


About Dan Atkinson

A Paraplanner at EQ Investors since August 2010, Dan’s Music Technology degree helps him approach Financial Planning problems creatively. IFP Paraplanner of the Year 2014 and member of the PFS Paraplanner Practitioner Panel, Dan is working towards Chartered status and recently became a CISI Accredited Paraplanner. Dan is also involved in youth work at his local Church in Hatfield.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.