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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Risk Profiling for Investors

An adviser wants to check whether a risk profiling questionnaire is giving reliable results. Which feature would most weaken its usefulness?

Leading questions that nudge clients towards a particular product most weaken a risk profiling questionnaire. They bias responses, so the resulting profile no longer reflects the client's real tolerance or capacity, undermining suitability. Coverage of both willingness and ability, consistent scoring and periodic review are all good practice.

  1. AQuestions that cover both willingness and ability to take risk
  2. BScoring that is documented and applied consistently to all clients
  3. CLeading questions that nudge clients towards answers favouring a particular productCorrect
  4. DPeriodic review of the profile when client circumstances change

Explanation

Leading questions bias answers towards a product and so distort the profile, making it unreliable and conflicting with suitability duties. The other features are good practice: covering both tolerance and capacity, consistent scoring and periodic reviews.

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