Reports of the Death of Risk Tolerance Are Greatly Exaggerated

October 26, 2009

Since the stock market decline a year ago, there has been much talk of permanent decrease in investors' risk tolerance. Many investors' losses were staggering, goes the refrain, so their tolerance for risk will, for the foreseeable future if not a generation, be substantially lower. Our hard data show otherwise. Average global monthly risk tolerance scores of advisers' clients in the U.S., Australia/New Zealand and Canada from January 2007 to December 2008 show a pattern of decline of only about three points (on a 0 - 100 scale) in each of these countries from earlier scores that ranged from a total of about 52 to about 57 points-less than a third of the standard deviation.

The full article is available to Money Management Executive subscribers only

Already a print subscriber? As a print subscriber, you are entitled to online access. Please click here to activate your account.