The issue of risk is a difficult one as there in no unit of measurement for risk tolerance. Risk can only be measured on a constructed scale in much the same way as IQ. An additional complication is that people’s definition of risk varies greatly.

Members of Advoco use a risk profile questionnaire, developed in conjunction with the University of New South Wales’ Applied Psychology Unit, in order to assist us ascertain ones attitude towards investment risk.

This questionnaire is purposely more detailed than others of its kind, as statistical studies have proven that the accuracy of a test is, in part, a function of the number of questions. The greater detail therefore ensures the result is not influenced by a particular past experience or the misinterpretation of a question. This questionnaire exceeds international standards for tests of its kind.

Following completion of this initial questionnaire, and subsequent discussions regarding investment risk, we are able to construct an efficient asset allocation.