How we calculate your risk

Second, our advisers will ask you to fill out an Attitude to Investment Risk Questionnaire.

Attitude to Investment Risk – To assist us with the delivery of our Investment Services we use a system called Dynamic Planner provided by Distribution Technology. Distribution Technology is the UK’s leading provider of financial planning and sales technology and has an excellent reputation for market-leading advice technology.

Their tool allows us to analyses our clients’ attitude to investment risk using a range of psychometric questions, this will help us determine where you sit on our risk scale and providing clients with a view of the consequences of their decision through the production of expected gains and losses based upon clients’ risk choices.

We assess your attitude to investment risk in 4 stages, which are outlined below,

1. Stage 1 – We take account of your preferences regarding risk taking by asking you to complete a risk questionnaire;

1. Stage 2 – The answers you give are then processed, which allocates a risk profile and asset allocation. This is used as a basis for a discussion to see if you agree with the allocated risk profile.

Following our discussion around the risk you wish to take, we will agree a risk profile, this risk profile will outline the amount of your investment will be allocated to an asset class. The lower the risk profile number the lower the potential risk to your capital, but also the lower the potential return.

1. Stage 3 – As Profit and Loss are two sides of the same coin; we will discuss the amount of loss you are able to financially bear in relation to the investment risk to ensure it is consistent with your investment objectives.

1. Stage 4 – How much risk do you need to take, this will relate to the shortfall between where you are now and where you want to be and the amount of time you have left to reach your set goal.

This means our advisers can pick the right areas for you to invest in and help you work out a time scale it may take for you to be able to achieve your goal.

Capacity for Loss – As previously stated, investments can go down as well as up, it is important for us to know how much loss of your capital you can tolerate before you feel you need to do something.

Your Tax Position – Will determine the type of investments we recommend as different investments will provide better tax efficient growth and income opportunities.