Trusting Clients’ Financial Risk Tolerance Survey Scores

Neil Hartnett, Paul Gerrans and Robert Faff

Financial Analysts Journal, 2019, vol. 75, issue 2, 91-104

Abstract: We examine whether and to what extent financial advisers can trust financial risk tolerance scores derived from client survey responses. We propose using the standard deviation of standardized survey responses as a simple, practical measure for determining the reliability of client risk tolerance measures. Our findings suggest that advisers will better discharge their fiduciary responsibilities by reexamining a client’s survey results if there is substantial variation in that client’s standardized survey responses and resurveying such clients to better gauge their risk tolerance scores. Dislosure: The authors report no conflicts of interest. Editor’s Note Submitted 26 December 2017Accepted 15 January 2019 by Stephen J. Brown

Date: 2019
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DOI: 10.1080/0015198X.2019.1575160

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