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Risk Tolerance and Circumstances

Risk Tolerance and Circumstances

Released: 2018-03-31
© CFA Institute Research Foundation
Risk Tolerance and Circumstances - QR Code
4.7 MB
Get it on Apple Books
4.7 MB
Get it on Apple Books
Released: 2018-03-31
© CFA Institute Research Foundation

Description

An investor’s risk attitude is a stable characteristic, like a personality trait, but risk-taking behavior can change based on the investor’s age, recent market events, and life experiences. These factors change investors’ perceptions of the risks. Differences in risk tolerance between men and women or in different circumstances trace back to emotional as much as rational considerations. Financial advisers should consider all of these factors when advising clients and can use four simple steps to incorporate best practices: be aware, educate, nudge, and hand hold.

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