3.1.4 Risk and Accessibility
- Comparative product investment risk.
- The client's perception of risk.
- The size of the portfolio and its capacity to accept different
levels of risk in its balanced spread i.e. how much loss of capital
is acceptable, will such a loss affect anything else, such as spending
plans.
- Specific factors such as loss on surrender, investment sector
risks, opportunity cost of different choices.
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Accessibility is to a certain extent a factor in risk assessment
in that the easier the access, the lower the return, and vice versa.
This involves opportunity cost risk in particular.
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Accessibility must also be differentiated in terms of time scale
in that an emergency fund should have instant access whereas this
is not necessary for long term accumulation. Consequently, product
accessibility needs to match plans closely.
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