The five golden rules of suitability

Risk 2014

Discretionary fund management firm Quilter Cheviot Investment Management has put together a list of the golden rules of suitability. Head of sales Glenn Hawksbee runs through the five-strong list designed to ensure clients’ are risk-profiled effectively.

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Risk profiling tools do not provide the answer


Hawksbee says: ”A risk profiling tool can help to facilitate a consistent  approach to risk profiling clients. It can provide the basis  for a conversation, not the answer. Understand how your risk profiling tool works and any shortcomings.”


Assess investment solutions regularly


Hawksbee says: “It’s not just your client’s risk profile that you need to assess, make sure you are risk profiling the investment solutions you are recommending, both at point of sale and through regular reviews.”


Make sure clients understand


Hawksbee says: “Capacity for loss and risk tolerance associated with each risk profile must be easily understood by your clients. Less is often more, steer free of technical terms and jargon and use images and numbers alongside written descriptions as these can assist client understanding.”


Collect enough information


Hawksbee says: ”Make sure you collect adequate information to allow you to make an informed recommendation. This may seem obvious, but the length of time a client wants to invest over, the objective of the investment e.g. income or growth, their capacity for loss and investment experience are all relevant to your recommendation.”


Tailor your solutions


Hawksbee says: “Don’t shoe-horn clients into standard solutions, make sure that you tailor solutions to meet the specific needs of each individual client.”

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