Discussing your risk profile
Your resulting risk profile is an indication of the extent to which you are prepared to accept a short-term fall in the value of your investments as markets go through their ups and downs. These fluctuations in the value of investments are also known as ‘volatility’.
If your risk profile is 1, then low volatility investments such as money market funds could be the resulting investment recommendation. If your risk profile is 10, then we might recommend a portfolio which includes investments mainly in asset classes such as emerging markets and Asia who’s higher expected volatility is matched by greater growth potential.
We will discuss with you how investment gains and losses might differ between different risk levels, to give you a better idea of the outcome you could expect at each level. In this way we can agree with you whether your risk profile accurately matches your true attitude to risk.
Over time it may be advisable to review your risk profile to take into account your changing circumstances (see ‘Monitoring & Reporting’).
‘A Guide to Our Risk Profiles’ provides further details.
"Your risk profile will help to highlight potential gains and losses."