Risk Tolerance - Willingness Low, Ability High overall

John10

What is the overall risk tolerance?

lcw77

You can try to advise the client and find a resolution, but you definitely have to respect the clients wishes. I mean, if they're well off financially, but only want to invest in risk free assets despite you saying they can afford to take risk, are you really going to do otherwise if they object?

infinitybenzo

I do remember seeing that, but I'm still a bit skeptical of Schweser here. I mean, it all comes down to whether the client will accept your advice. If they do agree to accept more once you've explained the situation, it would be average tolerance rather than below average. Unfortunately this is just another example of the overwhelming ambiguity of the potential answers. I would pick low tolerance if this came up, and hope that it gave you a few sentences to justify your reasoning.

Roflnadal

I agree with you, but Schweser says that it is safe to average the two. Look at the answer key for 2011 Practice Test 1, Book 2, #1.A

former

i always go with willingness, not abiity

if they are risk averse then it is always below average

Zestt

Ability = more quantitative and defined
Willingness = more subjective , less defined, more interpretation

dyga

CFAI Vol 2 Page 161 @ bottom

nannan66

willingness low dominates risk tolerance. Look at pg 110 R45. Can`t be clearer than this to me. Honour your client wishes.

thommo77

unless the client is wealthy

pennyless

not even then. If he doesn`t want to take risk you can`t make him can you!! Ability high, willingness low, risk tolerance = low. Can you find a spot in the CFAI which says otherwise.