Skip to content

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

Mr. Rohit Bansal has a risk profile completed three years ago when he was single and renting. He has since married, bought a home with a large loan and had a child. What should the investment adviser do?

The adviser should update the risk profile, because major life changes such as marriage, a large home loan and a new child alter the client's risk capacity and financial needs. A risk profile is not permanent and should be reviewed periodically and whenever significant circumstances change.

  1. AContinue with the old profile since a risk profile is permanent
  2. BUpdate the risk profile because changes in life circumstances can alter risk capacity and needsCorrect
  3. CUpdate it only if the market index has fallen more than 10%
  4. DUpdate it only if Rohit requests a change in writing

Explanation

Marriage, a home loan and a child change income needs, liabilities and dependents, hence risk capacity. Risk profiles should be reviewed periodically and on major life events, not tied to index movements or only to client request.

Did you get it right without looking?

One question tells you little. A timed set on Risk Profiling for Investors shows your real accuracy, how long you take and where you lose marks.

Practise Risk Profiling for InvestorsFree diagnostic mock

More Risk Profiling for Investors questions