The Natural Behavior Portfolio Risk Group for clients is provided on page 4 of the Financial DNA Summary Report.
The Natural Behavior Portfolio Risk Group shown on page 4 should be used as a starting point in determining the structure of a client’s investment portfolio. The Portfolio Risk Group shown for a client has been determined based on the blend of a client’s Natural Behavior Risk Propensity and Risk Tolerance Scores as summarized in the table on page 4.
The Overall Portfolio Risk Group that is ultimately used in the Financial Plan and Investment Policy Statement will also be influenced by other factors not displayed on the report. Prior to determining the final Portfolio Risk Group, please review the following with your client to determine the portfolio that is most suitable for them.
- A client’s goals and current financial capacity as shown in the Investment Portfolio Risk Reward Analysis table in Appendix Section 1.
- Learned risk behavior motivations that have evolved from circumstances, experiences, and education as shown in the Potential Learned Behavior Risk Motivations Table in Appendix Section 2.
The tables below are the same in all reports and are provided for a reference to use with clients to support conversations around risk, needs and learned behaviors and motivations.
This second table (shown below) gives you some possible motivations for why people may want to invest higher or lower than the natural behavior may indicate. These are some “learned” behavior situations. This table is designed to help you bring these situations up with your clients and talk through how they feel about them and help you gauge how clients feel about potential situations so that you can best advise them and put a plan together that will work for them.
For example, and advisor may have a client who would naturally have a fairly conservative style of investing but has a lot of knowledge about financial investing and has had positive experiences with investing so far and feels that the market is bullish – in that case, the client, though naturally conservative may want to take more risk in his/her portfolio due to those beliefs and knowledge.