Download or read book Financial Risk Tolerance A Psychometric Review written by John E. Grable and published by CFA Institute Research Foundation. This book was released on 2017-06-30 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This content provides financial analysts, investment professionals, and financial planners with a review of how financial risk-tolerance tests can and should be evaluated. It begins by clarifying terms related to risk taking and is followed by a broad overview of two important measurement terms: validity and reliability. It concludes with examples for practice.
Download or read book Risk Profiling and Tolerance Insights for the Private Wealth Manager written by Joachim Klement and published by CFA Institute Research Foundation. This book was released on 2018-05-01 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: If risk aversion and willingness to take on risk are driven by emotions and we as humans are bad at correctly identifying them, the finance profession has a serious challenge at hand—how to reliably identify the individual risk profile of a retail investor or high-net-worth individual. In this series of CFA Institute Research Foundation briefs, we have asked academics and practitioners to summarize the current state of knowledge about risk profiling in different key areas.
Download or read book Evaluation of Subjective Risk Tolerance Categorisation Methods Used by Financial Advisors written by Zaffar Subedar and published by . This book was released on 2007 with total page 418 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Predicting Financial Risk Taking Behavior written by John Grable and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this study was to compare and contrast the predictive validity of risk tolerance questionnaires. The tested questionnaires represented measures derived from economic and psychometric theory. It was determined that questionnaires based on economic theory had similar predictive power, implying that both measures provided some degree of reliability across measures. Only the psychometric theory-based risk tolerance measure was found to be correlated to other indicators of risk tolerance. Specifically, scores on the psychometric scale were correlated with knowledge of casino games, the likelihood of gambling, financial decision making experience, and investing knowledge, as well as participant holdings of cash and equities. A key finding from this study is that the psychometric questionnaire was the only measure to predict who was more likely to participate in a risk taking game where the outcomes of the game were unknown and potentially negative. Results from this exploratory study suggest that a questionnaire developed using psychometric theory appears to offer superior predictive ability of financial risk taking, at least when compared across the measurement techniques examined in this study.
Download or read book Investor Risk Profiling An Overview written by Joachim Klement and published by CFA Institute Research Foundation. This book was released on 2015-02-26 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current standard process of risk profiling through questionnaires is highly unreliable and typically explains less than 15% of the variation in risky assets between investors—mostly because the questionnaires focus on socio-economic variables and hypothetical scenarios. The existing research in risk profiling shows, however, that several factors can provide more accurate and reliable insights into the risk profile of investors. Among these factors are the lifetime experiences an investor has had, the financial decisions made in the past, and the influence of family and friends as well as advisers. By using these factors, practitioners can get a better understanding of their clients’ preferences in order to recommend suitable investment strategies and products.
Download or read book Risk Tolerance and Circumstances written by Elke U. Weber and published by CFA Institute Research Foundation. This book was released on 2018 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: An investor’s risk attitude is a stable characteristic, like a personality trait, but risk-taking behavior can change based on the investor’s age, recent market events, and life experiences. These factors change investors’ perceptions of the risks. Differences in risk tolerance between men and women or in different circumstances trace back to emotional as much as rational considerations. Financial advisers should consider all of these factors when advising clients and can use four simple steps to incorporate best practices: be aware, educate, nudge, and hand hold.
Download or read book Handbook of Consumer Finance Research written by Jing Jian Xiao and published by Springer. This book was released on 2016-05-30 with total page 379 pages. Available in PDF, EPUB and Kindle. Book excerpt: This second edition of the authoritative resource summarizes the state of consumer finance research across disciplines for expert findings on—and strategies for enhancing—consumers’ economic health. New and revised chapters offer current research insights into familiar concepts (retirement saving, bankruptcy, marriage and finance) as well as the latest findings in emerging areas, including healthcare costs, online shopping, financial therapy, and the neuroscience behind buyer behavior. The expanded coverage also reviews economic challenges of diverse populations such as ethnic groups, youth, older adults, and entrepreneurs, reflecting the ubiquity of monetary issues and concerns. Underlying all chapters is the increasing importance of financial literacy training and other large-scale interventions in an era of economic transition. Among the topics covered: Consumer financial capability and well-being. Advancing financial literacy education using a framework for evaluation. Financial coaching: defining an emerging field. Consumer finance of low-income families. Financial parenting: promoting financial self-reliance of young consumers. Financial sustainability and personal finance education. Accessibly written for researchers and practitioners, this Second Edition of the Handbook of Consumer Finance Research will interest professionals involved in improving consumers’ fiscal competence. It also makes a worthwhile text for graduate and advanced undergraduate courses in economics, family and consumer studies, and related fields.
Download or read book Research Foundation Review 2018 written by CFA Institute Research Foundation and published by CFA Institute Research Foundation. This book was released on 2019-04-19 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Research Foundation Review 2018 summarizes the offerings from the CFA Institute Research Foundation over the past year—books, literature reviews, workshop presentations, and other relevant material.
Download or read book Investment Risk Profiling written by Amy Hubble and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book New Vistas in Risk Profiling written by Greg B. Davies and published by CFA Institute Research Foundation. This book was released on 2017-08-01 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Risk profiling is fraught with misunderstandings that lead to ill-advised approaches to determining suitable investment solutions for individuals. The author discusses how we should think about the crucial elements of (a) risk tolerance, (b) behavioural risk attitudes, and (c) risk capacity. He uses a simple thought experiment to examine a stripped-down investor situation and define the essential features and exact role of each of the components of an investor's overall risk profile. He examines options for eliciting and measuring risk tolerance and considers some promising avenues for future methods.
Download or read book Research Foundation Review 2017 written by CFA Institute Research Foundation and published by CFA Institute Research Foundation. This book was released on 2018 with total page 126 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Research Foundation Review 2017 summarizes the offerings from the CFA Institute Research Foundation over the past year—books, literature reviews, workshop presentations, and other relevant material.
Download or read book Financial Planning and Counseling Scales written by John E. Grable and published by Springer Science & Business Media. This book was released on 2010-11-17 with total page 660 pages. Available in PDF, EPUB and Kindle. Book excerpt: The personal, household, and consumer finance field is growing quite rapidly, especially as universities and policy makers see the need for additional research and clinical application in this dynamic area of study. Currently, the profession is advancing towards the stage where professional practice becomes increasingly evidenced-based. Financial Planning and Counseling Scales provides educators, researchers, students, and practitioners with a much needed review of reliable and valid personal assessment scales and instruments that can be used for both research and clinical practice. In addition to presenting actual scales and instruments with applicable psychometric details, the book also includes an overview of measurement issues and psychometric evaluation.
Download or read book Financial Counseling written by Dorothy B. Durband and published by Springer. This book was released on 2018-10-16 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This text is a valuable new resource that we recommend for all of our professionals and are proud to incorporate as part of our AFC® certification program. With expertise representing the breadth and depth of the financial counseling profession, the content in this text provides you with a rigorous foundation of knowledge, considers critical theoretical models, and explores foundational skills of communication, self-awareness, and bias. This type of comprehensive approach aligns with our mission and vision—providing you with the foundational knowledge to meet clients where they are across the financial life-cycle and impact long-term financial capability." -Rebecca Wiggins, Executive Director, AFCPE® (Association for Financial Counseling and Planning Education®) This timely volume presents a comprehensive overview of financial counseling skills in accessible, practical detail for readers throughout the career span. Expert financial counselors, educators, and researchers refer to classic and current theories for up-to-date instruction on building long-term client competence, working with clients of diverse backgrounds, addressing problem financial behavior, and approaching sensitive topics. From these core components, readers have a choice of integrated frameworks for guiding clients in critical areas of financial decision-making. This essential work: · Offers an introduction to financial counseling as a practice and profession · Discusses the challenges of working in financial counseling · Explores the elements of the client/counselor relationship · Compares delivery systems and practice models · Features effective tools and resources used in financial counseling · Encourages counselor ethics, preparedness, and self-awareness A standout in professional development references, Financial Counseling equips students and new professionals to better understand this demanding field, and offers seasoned veterans a robust refresher course in current best practices.
Download or read book Smarter Investing written by Tim Hale and published by Pearson UK. This book was released on 2013-10-11 with total page 293 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Alpha and Omega of Financial Risk tolerance Assessment written by Wookjae Heo and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past three decades, numerous scaling and attitudinal measurement techniques have been developed to facilitate the assessment of an individual's financial risk tolerance. Cronbach's alpha has traditionally been used as the primary measure of scale reliability for assessment tools that have been developed using classical psychometric theory. Recently, however, psychometricians have raised concerns about the ongoing use of Cronbach's alpha as a robust measure of scale reliability. In its place, some have argued that reliability estimates should be based on greatest lower bound (GLB) and omega estimations. The purpose of this paper is to describe and compare these alternative reliability measures to Cronbach's alpha for a widely used research-focused financial risk-tolerance scale. Using a dataset with 179,450 observations, findings from this study suggest that while estimates based on Cronbach's alpha, omega, and the GLB do differ, for the most part, reliability estimates across the measures are more similar than dissimilar.Full Text Available Here:https://doi.org/10.1002/cfp2.1138.
Download or read book On the Linkage between Financial Risk Tolerance and Risk Aversion written by Robert W. Faff and published by . This book was released on 2007 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: There are two related literatures on financial risk tolerance (FRT) (based on psychometrically-validated surveys) and risk aversion (based on lottery experiments) that hitherto have not been intersected. Exploring their integration is the primary goal of this paper. Specifically, we follow a two stage process: (1) we obtain FRT scores from a psychometrically-validated survey on a sample of 162 people; and (2) we conduct a battery of lottery choice experiments on the same people. The second stage is primarily distinguished from earlier lottery choice experiments by being online and involving non-student subjects. Moreover, we contrast: real and hypothetical payoffs; low and high stake payoffs; decisions involving gains and losses; and order effects. Our key finding is that the two approaches to analysing decision-making under uncertainty are strongly aligned. We present evidence that this is particularly the case for the female participants in our sample. There is also some evidence that the alignment is strengthened when high stake gambles are employed.
Download or read book Risk Profiling through a Behavioral Finance Lens written by Michael Pompian and published by CFA Institute Research Foundation. This book was released on 2016-03-03 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This piece examines risk profiling through a behavioral finance lens. Behavioral finance attempts to understand and explain actual investor behavior, in contrast to theorizing about investor behavior. It differs from traditional (or standard) finance, which is based on assumptions of how investors and markets should behave. Much has been written about the tension that exists between the willingness to take risk and the ability to take risk. Risk appetite is the willingness to take risk and risk capacity is the ability to take risk. In the behavioral context, risk appetite and risk capacity are defined in terms of known risks and unknown risks. Irrational client behavior often occurs when a client experiences unknown risks. To aid in the advisory process, advisors can use Behavioral Investor Types to help make rapid yet insightful assessments of what type of investor they are dealing with before recommending an investment plan. With a better understanding of behavioral finance vis-à-vis risk taking, practitioners can enhance their understanding of client preferences and better inform their recommendations of investment strategies and products.
