Skip to content

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

Which of the following is a limitation of relying solely on a standardised risk-profiling questionnaire?

A key limitation is that clients may answer inconsistently or be swayed by recent market movements, so questionnaire results should be validated through discussion and cross-checked with financial data. Questionnaires can be documented and used for clients of any age.

  1. AIt cannot be documented for regulatory purposes
  2. BClients may answer inconsistently or be influenced by recent market moves, so results need to be validated through discussionCorrect
  3. CIt cannot be used for clients above 60 years of age
  4. DIt always overstates the client's risk capacity

Explanation

Questionnaires are useful and documentable, but responses can be affected by framing, recency and overconfidence, and may be inconsistent. The adviser should review the answers with the client and cross-check against financial data. They apply to all ages and do not systematically overstate capacity.

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