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It’s easy enough to throw a client a risk-tolerance questionnaire (RTQ) and call it a day. The RTQ is one thing; the client’s real emotions and behaviors are another.

Which one do you think they follow in real life?

Exactly.

Where the typical RTQ falls down

The emotional and psychological aspects of money govern behavior. So how do you understand people and where they’re coming from? How do you tap deeply into someone’s mind?

The traditional RTQ doesn’t. It fails clients and advisors. When a client answers an RTQ, they aren’t connecting with the fact that this piece of paper will determine what happens to them:

  • Losing more money than they wanted to lose; and
  • Having evidence that supports the case their attorney uses to sue an advisor for loss of money.

Instead, to them it’s just like filling out your license renewal form at the DMV: get it done as soon as possible and move on to the next boring task.

Blah blah blah.

For this reason, answers aren’t sincere. Clients could answer the questionnaire entirely differently on a different day.