investor profiling

When a wealth plan is made, the first step is to assess your capacity for undertaking financial risk. The capacity for risk depends on your responsibilities, objectives, personality and many other variables. In order to have a better understanding a risk profile is made, which analyzes an individual’s ability to assume financial risk as part of his/her investment portfolio. The profile has two components – risk appetite and risk tolerance. Risk Appetite is the amount of risk one is willing to take, while Risk Tolerance is the amount of risk your finances can handle. Your risk tolerance and appetite determine your asset allocation and drive the need to revisit your financial strategy from time to time. Deciding how much risk is good and how much is bad depends primarily on your impending responsibilities and feasibility of lifestyle. It is gauged by factors such as demographics (age and life stage) and socio- economic profile attributes (habits and lifestyle).

Through investor profiling, our team is able to determine:

1. Propensity:This takes into account the historical financial decisions taken by the client.

2. Attitude:This determines the client’s willingness to take risk. In this section, the client’s reactions to various risk-return situations are evaluated.

3. Capacity:This measures the financial constraints of the client or in other words the client’s financial ability to take risk.

Kesari Financial Services primarily determines the risk-taking ability of the investor, through the financial decisions made by the investor in the past and through his reactions to risk-return trade-offs. We have developed a comprehensive yet simple questionnaire-based investor profiling model. The model assesses clients on their investment propensity, attitude and capacity. The clients are explained the significance of each of the questions and their responses are scored to arrive at a final risk score. The final risk score when combined with the investment horizon of the investor helps in determining asset allocation for the investor and plan a suitable strategy accordingly.

What is asset allocation?

Why is asset allocation critical for various life stage planning?

How do I go about my asset allocation?

How often do I need to check my asset allocation?

Asset Allocation Model

Strategic Asset Allocation

Tactical Asset Allocation

Asset Allocation needs to respond to changes in the investor’s economic environment. Therefore, even though, the allocation does not change drastically because the client’s risk tolerance may not change, the asset allocation will have to be regularly “rebalanced”.

The Tactical Asset allocation Model will be a result of variations in underlying factors such as – inflation, IIP, money supply, growth as % of GDP, etc. The tactical asset allocation model is reviewed on a quarterly basis or as per the development of macro-economic factors in the Global economy.

Review & Scientifically Re-Balance your portfolio, consult Kesari Financial Services now!!!!

Kesari Financial Services can offer a personalized consultation to you, helping you clearly define your goals and develop a tailored life stage plan. With ongoing advice, guidance and customized recommendations, we can also help you address your short-and long-term financial needs.