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Trusting Clients’ Financial Risk Tolerance Survey Scores

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  • Neil Hartnett
  • Paul Gerrans
  • Robert Faff

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

Suggested Citation

  • Neil Hartnett & Paul Gerrans & Robert Faff, 2019. "Trusting Clients’ Financial Risk Tolerance Survey Scores," Financial Analysts Journal, Taylor & Francis Journals, vol. 75(2), pages 91-104, April.
    • Handle: RePEc:taf:ufajxx:v:75:y:2019:i:2:p:91-104
    DOI: 10.1080/0015198X.2019.1575160
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