Never gamify at the expense of accuracy. Gimmicky games trivialise risk tolerance, they do not test it.Helping clients navigate complexity is better than pretending it can be cost-effectively avoided. The real returns from an understanding of the customer are preferable to an artificial understanding by the customer.Humans and tech perform best when they play together. Managing moving financial and emotional parts benefits from blending human and technological qualities.



The lowered valuations of assets is not important, only the value when you need to withdraw years in the future. You’re much better to sit tight and wait, rather than to exit when markets are down.Try to avoid watching the markets day to day as this will just increase your anxiety to no useful end.Focus on the things that you can control: postpone discretionary spending wherever possible and put inessential financial goals on the backburner for the time being.




People buy stories, not investments. Without a supporting framework of fairytale-esque familiarity, diversification leads to discomfort.If diversification causes distress, it ceases to be such an obviously smart idea. A certain amount of home bias can be useful in buying emotional comfort at relatively low cost, but most investors veer too much to the familiar, and pay too much as a result.While changes to investments could be called for, changes to the decision-making processes and communications that surround the investments are a more cost-effective means to the same ends.I.e. direct what you will learn from reading statements.




Accounting for an investor's time horizon needs a rethink now that investments are no longer closely tied to singular investment objectives.A specific subset of investible assets may have a time horizon, but the notion of a single time horizon is nonsensical when applied (as it often is) to an investor’s holistic situation. Each investor has multiple time horizons, because they have multiple withdrawal points and multiple goals.Good risk capacity measurements manage time horizons automatically.



Personal finance is behavioural finance.Blending behavioural psychology with quantitative-finance theory employs the best of both human and algorithmic worlds. Humans concentrate on what they’re best at – empathy, values, conversation, navigating ambiguity, creating an environment for making comfortable and confident choices – while machines take on information-filtering, monitoring, and data-processing.There is nothing rational about offering a theoretically perfect solution in the knowledge that, as an imperfect human, the investor will fail to last the distance. The rational path is to provide an accurate scientific diagnosis of the best strategy each investor can stomach, and then offer an appropriate prescription.



Most attempts to measure risk tolerance fail in at least one crucial way, be it confusing the measurement, confusing the audience, or thinking guesswork is a good enough replacement for rigorous psychometric science.The difference between a faulty test and a good one is often in the testing - in scientific terms, how reliable and valid are the items selected for inclusion, and how well does the set work as a whole?Beware of measurements that, mix in traits other than risk tolerance, measure financial understanding, or provide inconsistent, unstable outputs.