Interview of October 19, 2016
Mr. Menkhoff, in many countries the law requires financial institutions to give financial advice to people who are going to invest money. How do financial institutions normally assess the risk attitude of their customers?
The most common way involves asking clients to self- assess their attitudes toward risk or their hypothetical response to a risky situation. Typically, clients will choose from a number on a scale: say from one (very risk-averse) to five (very risk-tolerant). This is an established method, widely used and accepted. [...]
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