Importance of Fact-finding (Risk Profiles)

I just did an online "training" session which basically consisted of me screening through a bunch of powerpoint slides on my own time and doing a set of TRUE/FALSE questions that coincided with the information presented in said slides. the Training session was one of high importance though - Company/Industry Updates 2012.

one of these updates is the Customer Knowledge Assessment.

Basically, this section assesses a client on their competency or familiarity with Investment-linked products and is actually a Know-Your-Client (KYC) requirement by the government following the Lehman Brother's hoo-ha.

What I've come to realize (ok, not really "realize" but more like, voice out loud) is that many people are desperate to grow their money. Who wouldn't want to grow their money right? they turn to professionals for advice on where, how much, and when to put their money into something they hope will churn our a fair amount of return in the coming years.

Some people are more savvy than others. They know where and who to look for to pick up tips, they have a sense for the timing of buy and sell, they find it easy to spot trends and leverage on them. Others are not so lucky, they require the sound advice of someone who skilled or trained in such business.

When it comes down to actually putting money into the investment, there are 3 different options. You can:

1. Take the professional's advice wholesale
2. Take half the advice
3. Totally not bother with anything the professional is saying.

Which leads me to the purposes of this Customer Knowledge Assessment requirement as a checklist to yourself and the professional  who is helping you to invest.

It's important to find out about your risk profile. How much loss are you able to withstand, how long before you intend to tap into your invesments, do you have any knowledge of your own, are you able to make decisions not knowing about the investment climate, what kind of products are suitable for you, etc?

For example, I wouldn't recommend the same type of products to cater to Mr. A who wants to put money into something and see a small and steady return, but also wants to make sure that capital is protected, to Mr. B who is ok with volatility in his account as long as his returns are potentially greater (i.e. more risk = more gain).

This section of fact-finding is MANDATORY not only for anyone that is investing for the first time, but also for your advisor to understand any requirements. At the end of the day, it is your hard-earned money that you will be putting in, and the more information you provide to the person assisting you, the better they can ensure that they can cater as closely as possible to your risk level.

Find out more from your friendly insurance agent today how you can put your money into funds that are specially suited to your type of risk profile and be protected today!

Jessica