Once an advisor has captured their client's Risk Number ® using the questionnaire, a wealth of information about the investor is on hand: age, goals, investment amount, and of course, the Risk Number and comfort zone. Our advisors use the client's Risk Number, in the context of all other relevant data, to design a portfolio that fits the client's needs.
The Risk Questionnaire allows advisors to objectively anchor the client to their risk tolerance, but our advisors never blindly follow its results. The questionnaire results can open up a wide-ranging discussion of risk and reward, allowing advisors to adjust from that anchor-based on their expertise and experience. The amount of risk an investor wants is not always the amount of risk an investor needs in order to reach their goals. Documenting both measurements (risk tolerance + Retirement Maps) will allow you to guide them toward the best investment decisions and ultimately set their Risk Target. Advisors will take all relevant information (i.e. taxes, age, time horizon, estate planning needs, income needs, etc) into account when actually making portfolio and retirement plan recommendations.
If you end up recommending substantially more or less risk than allowed by the client's tolerance, you may want to document the discussion with an override letter or in the "Notes" section when confirming a client's Risk Number.
PRO TIP: Interested in learning about some specific ways that advisors are using Riskalyze to monitor client risk? Check out our interactive Riskalyze Academy Lesson for the scoop.