Choosing the “right” risk tolerance questionnaire receives little consideration among financial advisors today, despite being a requirement for FINRA-registered brokers and insurance agents, and a matter of fiduciary protection for registered investment advisors. Michael Kitces will explore what exactly risk tolerance is, how it is distinct from risk capacity and risk perception, what risk tolerance questionnaires are designed to measure, and what it takes to create a high-quality risk tolerance questionnaire that will serve as a useful tool for assessing a client's risk tolerance.
