Financial advisors need to assess their clients’ risk profile to properly manage their portfolio risk and comply with regulatory provisions. Assessing an investor’s financial risk tolerance (FRT) is a challenge in the advisory process and none of the existing measures can be easily employed on a large scale. Previous literature has revealed a gap between self-assessed and psychometrically assessed measures of FRT (PA_FRT) but has not yet offered a solution to fill this gap. Thus, we propose a model that consistently estimates the PA_FRT by leveraging retail investors’ self-assessment and other information typically submitted in standard bank questionnaires. Our model represents a promising tool for financial advisors looking to improve their customers’ risk profiling.

Reconciling Self-Assessed with Psychometric Risk Tolerance: A New Framework for Profiling Risk among Investors / Mazzoli, Camilla; Palmucci, Fabrizio. - In: JOURNAL OF BEHAVIORAL FINANCE. - ISSN 1542-7560. - ELETTRONICO. - (2023). [Epub ahead of print] [10.1080/15427560.2023.2271108]

Reconciling Self-Assessed with Psychometric Risk Tolerance: A New Framework for Profiling Risk among Investors

Mazzoli, Camilla
;
2023-01-01

Abstract

Financial advisors need to assess their clients’ risk profile to properly manage their portfolio risk and comply with regulatory provisions. Assessing an investor’s financial risk tolerance (FRT) is a challenge in the advisory process and none of the existing measures can be easily employed on a large scale. Previous literature has revealed a gap between self-assessed and psychometrically assessed measures of FRT (PA_FRT) but has not yet offered a solution to fill this gap. Thus, we propose a model that consistently estimates the PA_FRT by leveraging retail investors’ self-assessment and other information typically submitted in standard bank questionnaires. Our model represents a promising tool for financial advisors looking to improve their customers’ risk profiling.
2023
File in questo prodotto:
File Dimensione Formato  
Mazzoli_Reconciling-Self-Assessed-Psychometric-Risk-Tolerance_2023.pdf

Solo gestori archivio

Tipologia: Versione editoriale (versione pubblicata con il layout dell'editore)
Licenza d'uso: Tutti i diritti riservati
Dimensione 1.41 MB
Formato Adobe PDF
1.41 MB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11566/323251
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 1
  • ???jsp.display-item.citation.isi??? 1
social impact