The Usefulness of risk profile questionnaires in financial advising

With research indicating that investors do not have consistent and rational attitudes to risk, this paper seeks to determine whether risk profile questionnaires lead to more rational investment decisions being made by clients. Analysis of the results of a risk profile questionnaire used by a financial planning practice suggests that investors are unwilling to bear short-term risk and, therefore, a more prescriptive approach may be necessary. An earlier version of this paper was presented to the 2012 Australian Centre for Financial Studies’ Melbourne Money and Finance Conference.5 page(s