Client Profiling

Attitude to investment risk is a latent variable, something which cannot be directly or simply measured like someone’s heart rate, for example. To measure effectively, it is important to consider the different factors that influence attitudes to risk. Individually, they provide insight, while combined, they create a clear picture of someone’s overall attitude. Questionnaires also assess a client’s investor experience and their capacity for investment loss.

Dynamic Planner’s attitude to risk questionnaire has three equal measures, which together form a dynamic model used to calculate a score and final profile for your client. In this way, it assesses what motivates people to take risk [drivers], what inhibits risk-taking behaviour  [constrainers] and what the impact is of contextual factors on risk-taking behaviour [enablers]. In tandem, questions are also framed to cover three attitude structures [cognitive, behavioural, emotional] in which attitudes are formed.

Dynamic Planner’s psychometric sustainability questionnaire – a first for the profession when it launched in 2021 – uses the same method, but with a different model which divides a client’s attitude here into five parts: how important it is that values and beliefs are taken into consideration [personal values]; the importance of decisions benefiting others [psychological distance]; how someone feels knowing their investments are having a positive or negative impact [emotional benefit]; the extent in which they would like to ensure their investments have a positive impact [positive impact]; and their willingness to forgo personal returns, for wider benefits [financial considerations].

In 2018, Dynamic Planner’s team built on academic research to create a dynamic model to measure your client’s attitude to investment risk. The model was created in collaboration with the triple-accredited Henley Business School, a relationship which in 2022 was rated ‘outstanding’ by government body Innovate UK.

From that foundation, questions were developed, based on academic research, before being tested and retested on different groups of UK consumers, carefully selected to match the demographics of typical end clients in Dynamic Planner. In 2021, the same team repeated the process to create a new questionnaire to capture clients’ sustainability preferences. If your firm wishes to, for your due diligence, you can request to see Dynamic Planner’s due diligence, transparently detailing the process behind how both questionnaires were created.  

Periodically, the questionnaires are retested, using a large but random selection of responses from hundreds of thousands of end clients of advice firms. Investors’ answers are mapped back to the model constructed to first create the questionnaires. Do questions still work in the way that they were intended? Do they remain valid? Reflecting Dynamic Planner’s continual pursuit of excellence, enhancements to the wording of individual questions have been introduced post-2018, but the original foundations remain robustly the same, re-confirming the diligent quality of the psychometric process when the questionnaires were first created.