The Andes’ Risk Tolerance Test offers additional visuals to make your conversation with your clients more effective.
We have three charts on the Risk Tolerance Test that you can show to your clients depending on their risk tolerance result.
1. Drawdown graph
For someone who is leaning too aggressive, the drawdown chart shows how much they could potentially lose during market turmoil. If they confirm that they are indeed fine with, say, a 50% drawdown, this information will be captured in the investment policy statement, which they will sign.
2. Growth of $1 graph
For someone who is leaning too conservative, especially for someone in their 30s or 40s who have the time horizon, you want to show them the “growth of $1” chart to show the amount of money they’d be leaving on the table. So, they don’t come back to you five years later regretting it.
3. 10-Year Range Chart
The 10-year chart tells the long-term story. It shows that it fluctuates significantly from year to year. But if you look at longer terms, the returns are more and more certain. This will help put investors’ minds at ease.
