Risk Profile Questionnaire

Transcription

1 Risk Profile Questionnaire Names: lient 1 lient 2 Date of ompletion: dviser: Important notice to clients: orporations law requires that in order to make an investment or insurance recommendation, the adviser must have reasonable grounds for making a recommendation. This means that the adviser must conduct an appropriate investigation as to the investment objectives, financial situation and particular needs of the person concerned. The information requested in this form is necessary to enable a recommendation to be made on a reasonable basis and will be used for that purpose. Last updated: May 2014 Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL

2 bout Your Risk Profile This Questionnaire looks at your attitude to investing, your understanding of financial markets and how you may react during certain investment market and economic conditions. Financial planning is a long-term process and many of the investments are also long-term in nature. However, while long-term growth is generally achieved, it may come with periods of negative returns. To ensure your financial goals are reached, generally you must remain invested true to your financial plan during these periods. The following questions help us understand your tolerance for financial risk. The information gives us an overall understanding of your investment profile and helps us understand what investment mix and products will be appropriate, or inappropriate, in helping to achieve your investment goals. There are no incorrect answers. Simply circle the appropriate answer for you. Risk Profile Questions 1. What is your major investment objective? void any fluctuation in the value of my investments. Maintain the security of my investments with regular income on which to live. Maintain regular income with some exposure to capital growth. Maximise the growth of my investments. D D 2. How would you react if your investments were to decline in value by 20% over a one-year period? Withdraw all my funds immediately and move them to bank deposits. Withdraw part of my money and move it to an alternative strategy. Wait until I recovered the 20% loss and then consider alternative strategies. Remain invested and follow the recommended strategy. D D Increase the amount invested if possible as the market has become cheaper. E E 3. n investment portfolio with high exposure to growth assets tends to generate higher returns, albeit with some volatility. To what extent are you willing to experience volatility to generate higher returns? I m very comfortable. I understand that to generate higher returns there is a risk of fluctuation of my investments in the short-term. However, over the long term, there is a low risk of capital loss. I m somewhat comfortable, assuming there is a limit to the volatility. I m a little uncomfortable seeing my investments fluctuate. I m much more comfortable with investments that have minimal volatility. D D 4. Which of the following best describes your attitude towards investment losses? I would check the value of my investments at least several times a month and feel very uneasy if I began to lose money. Daily losses make me uncomfortable, but no cause for alarm. I would start to feel very uneasy if I made a loss on my investments over a 12-month period. I would take substantial day-to-day changes in my stride. I would start to feel very uneasy if I didn t recover any significant losses within 1 to 2. If my investment suffered significant losses over a two-year period and I still believed in my long-term strategy, I would remain fully confident of a recovery in performance. D D Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL

3 5. My preferred strategy for managing investment risk is: I don t want to reduce it as investment risk leads to higher returns over the long-term. To have a diversified investment portfolio across a range of asset classes to minimise risk. To invest mainly in capital stable investments. I don t understand the definition of investment risk. I rely on my financial adviser to achieve this. 6. In the past, how would you describe your overall investment decisions? Not applicable. I m a first time investor or have only ever invested via my superannuation fund. Good, I have stuck to stable and safe investments. Good, I have been rewarded for making investments that can fluctuate in value. Fair, however I would like to improve my returns. D D I have had some losses, but am willing to give it another go. E E I have had some losses and am reluctant to invest in anything that fluctuates in value. D F D F 7. Which of the following best describes your understanding of the investment markets? I am an experienced investor and constantly keep up to date with the investment market. I ve had exposure to various asset classes and I am fully aware of the risks involved to gain higher returns. My awareness of the financial market is limited to information passed on by my broker or financial adviser. I rely on the professionals to keep me updated. I have little awareness of the investment market. However, I have a desire to build my knowledge and understanding. I m not familiar with investments or financial markets. D D 8. What is your willingness to risk shorter-term losses for the prospect of higher longer-term returns? High. Moderate. Not sure. Low. D D Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL

4 9. Have you ever borrowed money to make an investment other than your own home e.g. investment property, holiday home, share portfolio, margin loan etc? No. Yes. No, but I m willing to consider it now. Yes, but I m not prepared to borrow at the moment to invest. D D Scoring Matrix D E F 0 nswer Summary Questions Total Score Investment Risk Profile lient 1 Score lient 2 Score Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL

5 Your Investor Risk Profile Summary (tick applicable profile) Defensive (Score 1-140) The Defensive portfolio is suitable for investors seeking a relatively low-risk investment. They don t want to aim for higher returns if it means their portfolio may decrease significantly in value. It is also suitable for investors who have a short term investment time frame, as they may need access to their funds within three. The Defensive portfolio will have an allocation of around 33% to growth assets such as shares and property. apital is not guaranteed and there is some risk of a portfolio decreasing in value, although this is substantially reduced for investments over the recommended minimum investment term of three. Moderate (Score ) The Moderate portfolio is suitable for investors seeking an investment which balances risk and return. It is also suitable for investors who have a short term investment time frame, as they may need access to their funds within four. The Moderate portfolio will have an allocation of around 52% to growth assets such as shares and property. apital is not guaranteed and there may be fluctuations and some negative returns from year to year. There is a risk of a portfolio decreasing in value although this is substantially reduced for investments over the recommended minimum investment term of four. alanced (Score ) The alanced portfolio is suitable for investors seeking an investment which balances risk and return. They are prepared to invest for a long term and ride out periods of negative returns provided they may benefit from higher returns. The alanced portfolio will have a large allocation of around 71% to growth assets such as shares and property. apital is not guaranteed and there may be some large fluctuations and some negative returns from year to year. There is a significant risk of a portfolio decreasing in value in the short term although this is substantially reduced for investments over the recommended minimum investment term of five. Growth (Score ) The Growth portfolio is suitable for investors seeking a higher return investment. They are prepared to invest for a long term and ride out extended periods of negative returns provided they may benefit from higher returns. The Growth portfolio will have a large allocation of around 85% to growth assets such as shares and property. apital is not guaranteed and there may be large fluctuations and some negative returns from year to year. There is a significant risk of a portfolio decreasing in value in the short term although this is substantially reduced for investments over the recommended minimum investment term of seven. High Growth (Score ) The High Growth portfolio is suitable for investors seeking a higher return investment. They are prepared to invest for a long term and ride out extended periods of negative returns provided they may benefit from higher returns. The High Growth portfolio will have a large allocation of around 87% to growth assets such as shares and property. apital is not guaranteed and there may be large fluctuations and some negative returns from year to year. There is a significant risk of a portfolio decreasing in value in the short term although this is substantially reduced for investments over the recommended minimum investment term of ten. Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL

6 Your Investor Risk Profile - haracteristics enchmark portfolios Defensive Moderate alanced Growth High Growth Minimum timeframe sset allocation ustralian cash 25% 12% 6% 3% 3% Diversified fixed interest 45% 38% 24% 12% 0% Total defensive assets 70% 50% 30% 15% 3% ustralian equity 14% 24% 30% 37% 42% International equity 8% 13% 23% 30% 30% Property 8% 8% 8% 8% 10% lternatives 0% 5% 9% 10% 15% Total growth assets 30% 50% 70% 85% 97% NOTES: Range of Returns (p.a.) (based on a 95% confidence level) 5 rolling forecast range (%p.a.) Frequency of a negative return est 12 month historical scenario Worst 12 month historical scenario 3.5% to 9.6% 1 in % to 12.3% 1 in % to 14.8% 1 in 5.4 (1.2%) to 16.9% 1 in 4.9 (1.5%) to 18.1% 1 in % 22.7% 28.7% 33.5% 37.0% (9.4%) (17.9%) (26.1%) (31.9%) (34.9%) Minimum timeframe refers to the minimum period of time an investor should be prepared to remain within a given benchmark portfolio in order to recoup any past capital losses that would have been incurred from the initial investment, taking into account the entry point, the time needed to achieve the portfolio return objective and the normal business cycle. lternative investments include, but are not limited to, Hedge Funds, Fund of Fund Hedge Funds, Private Equity, Direct and Indirect Infrastructure, Derivatives based funds urrency Funds and ommodity Funds. Frequency of a negative return does not mean you cannot experience multiple of negative returns. It reflects a distribution of expected return outcomes relative to the expected risk of the strategy. The best and worst 12 month historical scenario illustrates the best capital increase and worst capital loss respectively that would have been experienced over a rolling 12 month period. These figures have been calculated by applying the asset allocations of the benchmark portfolio against the asset class benchmark returns. This analysis has been carried out with the first 12 month rolling return commencing January Over this period the best case scenario is for the 12 months ended March 2010 and the worst case scenario is for the 12 months ended November Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL

7 Portfolio target return Forecast average return over the long term (10 plus) Defensive Moderate alanced Growth High Growth Inflation Inflation Inflation + Inflation Inflation + 3% + 4% 5 % + 5.5% + 6% 6.1% 7.4% 8.6% 9.5% 9.9% Value of $100,000 invested for 10 (90% confidence) $800,000 $730,463 $700,000 $672,750 $600,000 $532,322 $500,000 $400,000 $387,307 $300,000 $200,000 $276,361 $180,781 $204,191 $228,191 $247,823 $257,026 $100,000 $116,054 $103,041 $90,438 $81,707 $80,055 Forecast return information The values of $100,000 invested for 10 are based on an exponential calculation using the long-term forecast return and the forecast standard deviation of the portfolio which is adjusted for a confidence interval using a student probability distribution. The forecast information in this questionnaire has been prepared by the T Financial Group s Research team. Long-term forecast returns and risk for each asset class have been based on the analysis of historical and forecast market data, fundamental economic factors and historical co variances between the asset classes and are best estimates of asset class returns and risk. These forecast figures provide a guide as to the likely future behaviour of returns for asset allocations.the long-term forecast returns in no way provide any guarantee of future performance and are based on the strategic long-term view of each asset class as at the end of December Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL

8 n inflation rate of 2.5% has been used for the ustralian asset classes. The exposure to international asset classes required consideration of relevant economic factors for each country. Portfolios have been constructed on the basis that 25% of the International Shares allocation has been hedged and 75% has been unhedged. confidence level is a statistical measure that illustrates the likelihood of an event taking place. In the case of this questionnaire, it looks at the likelihood of a return falling within the stated range and the likelihood of the value of an investment of $100,000 over 10 falling within a stated range using a 95% confidence interval. 95% confidence means that for the value of $100,000 invested for 10, there is a 5% probability that the expected returns fall outside the stated range. This is described as 95% confidence. Forecast returns don t make provision for investment fees and taxation as this will depend on the investments you select and your personal financial circumstances. However, the domestic equity forecasts do incorporate grossed-up franking credits and assume 80% of the dividends accrue franking credits. dditional omments & onsiderations Your cknowledgement ased on the result of the Risk Profile Questionnaire and the above responses to my/our priorities and lifestyle needs, I/we am/are comfortable with investing in line with the Investment profile above. lient 1 - Signature lient 2 - Signature Date: Date: lient 1 - Name lient 2 - Name Lowe Lippmann Trakman Financial Services Pty Ltd N uthorised Representative of Hillross Financial Services N FSL