Let’s float a theory on why there are so many nervous investors: It’s because the investment industry does such a poor job of talking about the risk of losing money.
When you first sit down with an adviser, broker or financial planner, you’re very likely to be handed a questionnaire to assess your comfort with risk. A study commissioned by the Ontario Securities Commission’s investor advisory panel has found these questionnaires are mostly junk.
Eighty-three per cent of the risk questionnaires looked at in the study were judged inadequate for reasons that include too few questions, or questions that are poorly worded or confusing. Another notable glitch is that 55 per cent of these questionnaires had no way to recognize risk-averse clients that should hold only cash.
ROB CARRICK – Globe and Mail – Nov. 27, 2015.
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