Advisers have been urged to more carefully assess their client's risk tolerance as new research from FinaMetrica shows women tend to be more risk averse than men.
According to a statement released by the risk profiling firm, a survey of Australian couples found men tend to have a higher risk tolerance than women in 65 per cent of relationships.
Where a ‘material difference’ in risk tolerance was identified, the man was the risk-taker in 82 per cent of cases.
FinaMetrica co-founder Paul Resnik urged advisers to consider the needs of both parties when advising couples.
“Advisers must consider the risk preferences of each person in a couple in giving investment advice – and shouldn’t ignore the needs of the less risk-tolerant partner, who is usually the woman,” he said.
“Still today, financial advisers often skip the process of separately assessing a couple’s risk tolerance and either apply the male’s risk tolerance in determining a financial plan or superimpose their own preferences on the couple.”
He warned this practice was dangerous, both legally and ethically, and urged advisers to run risk tolerance tests with both partners.
“This could lead to greater longer-term understanding and satisfaction as each person becomes empowered by their involvement with crucial decisions about their future,” he said.
“The key to a more harmonious relationship between a couple and their financial adviser is the informed consent of each to the risk in their financial plan.”
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 23 Aug 2017Former ANZ adviser banned for lifeBy Staff Reporter
- 23 Aug 2017Industry veteran joins Bondi boutique’s boardBy Aleks Vickovich
- 23 Aug 2017Invest in next generation, says AWSBy Staff Reporter
- 22 Aug 2017O’Dwyer announces EDR transition panelBy Staff Reporter
- 23 Aug 2017ASIC reveals recent enforcement activityBy Larissa Waterson
- 22 Aug 2017Advisers must become ‘lifestyle coaches’: ZurichBy Jessica Yun
- view all