Time horizon is entered by the at the beginning of the risk profiling activity. Clients should enter a time, in years, when they anticipate needing 10% (or more) of the investment money in question.
The time horizon entered by a client at the beginning of the risk profiling activity does not affect the mathematics of the calculation of that client’s risk preferences.
It will have two other effects–
1) If the time horizon entered is shorter than the minimum time horizon on any of your model portfolios, then that will be flagged in the advisor dashboard. The purpose is to inform you as the advisor that there may be an inconsistency between a client’s time horizon and the minimum horizon on certain model portfolios.
2) It will help frame the client, so they go through the decision scenarios with the right investment context in mind. A client’s risk preferences for superannuation when retirement is 20 years out might be different than their risk preferences for education savings when a child’s education is only a few years away. So, the goal and the time horizon questions up front help to set investment context for the client before they answer the scenarios.
Leave A Comment
You must be logged in to post a comment.