About the ATRQ
Assessing the suitability of products for different clients is a vital early stage of the financial advice or guidance processes.
Central to this is understanding an individual’s attitude to risk – a concept that can be difficult for many people to explain clearly.
There are three key components to assess when analysing an individual’s attitude to risk.
- Attitude to risk: This describes a person’s willingness to take risk, whether it is financial or in other parts of their life. This can inform how prepared they may be to take high levels of investment risk.
- Capacity to take risk: This describes the client’s ability to cope if they experience a financial loss.
- Need to take risk: This explores the individual’s time horizon and investment goals to understand what they are trying to achieve. It is usually assessed during an advisers factfinding work.
The Attitude to Risk Questionnaire, or ATRQ, assesses the first two of these components to make it easier for advisers and product providers to discuss risk appetite with their clients.
We have developed several distinct versions of the ATRQ that can be applied pre- and post-retirement. These can help identify suitable investment approaches for pension saving, retirement income, drawdown strategy, and sustainable investing.
The system is based on the established principles of psychometrics – the science of measuring individuals’ attitudes and making intangible concepts quantifiable.
The questionnaires consist of clear and straightforward statements to which investors can respond, and avoids questions and concepts that people may be uncomfortable with, such as mathematical concepts and financial industry jargon.
We have a long and successful track record of working with financial advisers, networks, product providers, and financial technology companies to integrate our tools into their systems and processes and facilitate the all-important suitability discussion.