A number of non-objective issues can affect what investments and strategies are appropriate for a particular investor:



  • Investor knowledge and sophistication
  • Client values
  • Client demographics

Exam Tips and Tricks
Consider this sample exam question:



  1. The risk tolerance of the client is NOT a factor to consider when making investment recommendations to which client type(s):
    1. Trusts
    2. Estates
    3. Limited partnerships
    4. Accredited investors
    1. IV only
    2. I and II only
    3. I, II, III & IV
    4. None of the above
The correct answer is "d": risk tolerance must be considered for all investors, even institutional ones.


Introduction

Related Articles
  1. Financial Advisor

    What Is Your Client's Willingness and Ability to Take Risk?

    Financial advisors must carefully consider a client's willingness and ability to take investment risks, including tax concerns and liquidity needs.
  2. Financial Advisor

    How Financial Advisors Manage Liquidity Risk

    Financial advisors have to carefully consider a client's willingness and ability to take investment risks, including tax concerns and liquidity needs.
  3. Financial Advisor

    Risk Tolerance: Why Advisors, Investors Mess It Up

    Quantifying the amount of risk that a client is willing to take can be a deceptively difficult task. Here's why.
  4. Financial Advisor

    Pro Tips on Evaluating Clients' Risk Tolerance

    Want to keep clients longer? Bolster your risk assessment capabilities.
  5. Financial Advisor

    Advisors: Revisit Your Client's Risk Assumptions

    Financial advisors should avoid generalizing a client’s risk tolerance based on their age or other demographics.
  6. Personal Finance

    What to Expect on the CFA Level I Exam

    The Level I exam for the Chartered Financial Analyst designation can be challenging. Here's what to expect.
  7. Personal Finance

    Tips for Taking the CFA Exam: Part 1

    Peter Mackey, head of exam development for the CFA Institute, shares his tips for taking the CFA level I, II and III exams.
  8. Personal Finance

    Tips for Taking the CFA Exam: Part 2

    Peter Mackey, head of exam development for the CFA Institute, shares his tips for passing the CFA level I, II and III exams.
  9. Financial Advisor

    Manage Your Clients' Expectations

    You can't control how they react to the market, but you can help them understand the reality of the situation.
  10. Financial Advisor

    6 Proven Tips For Series 6 Success

    These techniques can help you pass this test without the added stress.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center