Risk Assessment Rules Any aspect of portfolio structure that may impact on the portfolio’s ability to meet an investor’s financial security needs to be communicated to the client and their attitude towards it assessed by the client.
The investor needs to be educated about these risks and, he or she needs to be able to assess whether the recommended structure adequately meets their needs and preferences. They should also be provided with options that provide real alternatives to the recommended portfolio.
Any aspect of portfolio structure that has been specifically designed to deal with a risk to financial security also needs to be assessed for the same reasons discussed above. Any aspect of investment strategy and asset allocation that may conflict with the investor’s risk and performance preferences also needs to be assessed at outset.
The investor needs to be educated about the advisor's investment style, the recommended portfolio and any options that the client has to change to a more aggressive or more conservative portfolio.
The only way an advisor can effectively assess risk aversion is by educating the client over the basics of the risks and factors affecting the risks. An investor enters a wealth and asset management relationship with expectations. If these expectations are not carefully managed and assessed by the advisor there will be conflicts later on in the relationship. It is therefore extremely important that investors seek advisors with a focus on education, communication and risk assessment.  | 
