Journal of Financial Planning: March 2003
This article proposes a risk tolerance questionnaire that develops asset allocation guidelines as a dual function of risk tolerance and time horizon. Although no risk tolerance questionnaire by itself can provide a definitive answer to the asset allocation question, it can be a useful instrument for making a first pass at an optimal solution and can be a valuable supplement to standard optimization modeling or Monte Carlo simulations. At a minimum, the questionnaire approach provides a useful starting point for discussion of the implications of a client’s risk tolerance for his or her asset allocation choices.
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Topic
Investment Planning
Risk Management & Insurance Planning