Risk profiling essential to meet best interest duty

www.moneymanagement.com.au
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fairly difficult
News summary.
Ensuring standardised practices for establishing a clients' risk profile is crucial to meet best interest duty, according to Oxford Risk.

The UK-based behavioural finance firm was launching into Australia as it said it expected suitability and best interest duty to come under greater scrutiny in light of the Royal Commission.

There had already been a regulatory reform in the UK called the Retail Distribution Review (RDR), which was similar to the Royal Commission, and this had led to an "tightening up" on how advisers established risk capacity and risk tolerance.

The problem, however, was the lack of clear standardised process by advisers to establish a client's risk profile as many were only looking at one part of a client profile such as their risk tolerance or how much the client wanted to achieve in returns.

"We have done studies where we give a case study to 200 advisers and…
Laura Dew
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