What is the overall risk tolerance?作者: lcw77 时间: 2011-7-13 13:18
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?作者: infinitybenzo 时间: 2011-7-13 13:18
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.作者: Roflnadal 时间: 2011-7-13 13:18
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作者: former 时间: 2011-7-13 13:18
i always go with willingness, not abiity
if they are risk averse then it is always below average作者: Zestt 时间: 2011-7-13 13:18
Ability = more quantitative and defined
Willingness = more subjective , less defined, more interpretation作者: dyga 时间: 2011-7-13 13:18
willingness low dominates risk tolerance. Look at pg 110 R45. Can`t be clearer than this to me. Honour your client wishes.作者: thommo77 时间: 2011-7-13 13:18
unless the client is wealthy作者: pennyless 时间: 2011-7-13 13:18
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.作者: lcai 时间: 2011-7-13 13:18
it is one of the EOC questions in the CFAI book作者: susana 时间: 2011-7-13 13:18
I guess we should take the more conservative one among ability and willingness...作者: Valores 时间: 2011-7-13 13:18
It's LOW. You put something in the Unique Circumstances or Return section about meeting with client to discuss their low willingness vs high ability at some later point, but you don't ignore their wishes when writing the IPS.作者: Colum 时间: 2011-7-13 13:18
it is subjective and I have no idea....
if they are 30 I will choose above
60 choose below
Edited 1 time(s). Last edit at Sunday, May 29, 2011 at 12:01AM by goodman2011.作者: Chuckrox 时间: 2011-7-13 13:18
Interestingly in the Stalla mock there's an individual with high ability and low willingness who they recommend to average.作者: IAmNeil 时间: 2011-7-13 13:19
i would say low and then in unique mention that you should try to educate to reconcile differences.作者: canadiananalyst 时间: 2011-7-13 13:19
So I will deffo be averaging if I see one of these come up!作者: former 时间: 2011-7-13 13:19
Just rereading Schewer, they appear to say you should only average the two is the required return is very low (ie there are a lot of assets compared to required return), as in this case the client can withstand a large drop in portfolio value before their goals are put in danger.
