Series 65: 5.2.4 Risk Tolerance

Taken from our Series 65 Online Guide

5.2.4  Risk Tolerance

Advisers sometimes cross the line of reassuring cautious clients, using their expertise to convince a client to invest in something that ultimately serves the adviser’s goals. When this occurs, advisers can quickly find themselves losing accounts or, worse, in legal trouble. Understanding a client’s risk tolerance, or the amount of decline they can tolerate in both their broad portfolio and any one investment, is crucial to building long-term trust with clients.

Clients often won’t be able to tell you exactly what their risk tolerance is, so it falls on you as their adviser to help them explore what the concept might mean for them. Some standard definitions to include in your discussions with them are:

Conservative risk tolerance. Investors who consider themselves conservative usually cannot tolerat

Since you're reading about Series 65: 5.2.4 Risk Tolerance, you might also be interested in:

Solomon Exam Prep Study Materials for the Series 65
Please Enable Javascript
to view this content!