Katherine Al Haddad

By Katherine Al Haddad

June 10, 2020


Should you revise your investor profile?

Article revised on 10 June 2020

COVID-19 is on everyone’s lips these days. Even your investment statements to March 31, 2020 were affected by it! How did you react to the daily fluctuations of securities held in portfolio? If you’ve lost sleep over this volatility, it may be time to rethink your investor profile. Why?

In the wake of uncertainty—as the result of a sanitary crisis that leads to a financial one, for example—it may be wise to review your investor profile, in order to ensure optimal asset allocation based on your actual risk tolerance. In fact, you should be doing this at least every two years.

It should also be adjusted following major life events. Having a baby, getting married, or changing jobs are all occasions to speak with your trusted financial advisor. And if you’re about to make a new investment and have some concerns holding you back, tell your representative about them.

Regardless of when you last updated your profile, if you’re no longer comfortable with your past risk tolerance, take action! After all, knowing your actual ability to manage investment risk is key to appropriately determining the types of investments you should be making.

A financial security advisor: your best ally

Rest assured: You aren’t alone questioning the relevance of an investment. The financial security advisor is also required to follow up regularly and review their clients’ investor profiles.

They need to know their clients and understand their investment goals, based on each one’s personal situation. An investment that works for one individual may not necessarily be appropriate for someone else.

It’s their job to help clients define or update their investor profile, explaining each section of the form in laymen’s terms. And that’s not all! They must also clearly explain the composition of the chosen investment portfolio in relation to the investor profile.

A guide to avoid lapses

Your advisor must also be a bulwark against excessive enthusiasm toward a particular asset. It is their duty to bring you back to the essential—investing based on your risk tolerance, which changes over time. It’s therefore best to adjust your investor profile as life occurs.

This will prevent more sleepless nights next time a black swan—an unpredictable event that comes with significant consequences—comes along.

In short:

  1. The investor profile questionnaire is a starting point for devising your investment strategy.
  2. This process helps you find the type of investment that’s right for you. The advisor has obligations in this matter.
  3. In this era of COVID-19, keep in mind that the success of your investments in the long-term is directly related to your ability to accept the volatility of the market in the short-term.

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