Gill Hutchison: The long and the short of risk profiling

Risk-profiling and asset allocation tools

Risk-profiling tools have become embedded more widely into advisers' investment processes in recent years but, asks Gill Hutchison, what does this mean as and when any market mean reversion occurs?

Risk-profiling and asset allocation tools have received some mixed press over recent years, especially after the Financial Conduct Authority (FCA) highlighted that, in its view, some tools had "flawed outputs". That observation notwithstanding, the usage of such tools has marched onwards and they have become embedded more widely into advisers' investment processes. Risk profiling is a multi-faceted task that must take account of an investor's attitude to risk, time horizon and ability to withstand losses. Quite rightly, the FCA became rather hot under the collar about the last of these p...