Making wise investment decisions requires a proper and full assessment of your profile as an investor.
Investor Profile Questionnaire
Client Name:
Financial Advisor:
Date:
Introduction
The purpose of this questionnaire is to help you document your personal savings and investment objectives and then prioritize them as part of a commitment to reach your short, medium and long-term goals. The Income Statement, Net Worth Statement and the Investor Risk Profile section play an important part in the “Know-Your-Client” process and in the development of an Investment Policy Statement as it’s intended to probe and assess your investment time horizon, investment objectives, and tolerance for risk as it relates to your goals.
Income Statement
| Income (Annually) | Client | Spouse |
|---|---|---|
| Employment | ||
| Self-Employment | ||
| Rental Income | ||
| Company Pension | ||
| Canada Pension (CPP) | ||
| OAS | ||
| Other Income | ||
| Total Gross Income |
Net Worth Statement
Liquid Assets
Cash (Savings)/Short Term Deposits
Life Insurance Cash Value
TFSA
RRSP/RIF
DPSP’s
Education Funds
Non-Registered (GIC/Bonds/Mutual Funds/Stocks)
Other
Total (Liquid Assets)
Fixed Assets
Residence
Real Estate/Recreational Property
LIRA/LIF/LRIF
Pension Plans (DCC/DBP)
Business Interest
Vehicles
Furnishings /Collectibles/Jewellery
Other
Total (Fixed Assets)
Short Term Liabilities
Credit Cards
Lines of Credit
Accrued Taxes/Other
Long Term Liabilities
Mortgages
Automobile Loans
Investment Loans
Other
Total (Liabilities)
Net Worth (with Spouse)
Total
The questionnaire consists of 15 questions and is divided into 5 categories:
Investment Knowledge
Investment Time Horizon
Investment Objectives
Risk Capacity
Risk Attitude
The Investor Profile questions should be completed for each of your savings objectives. Once you check the reply that is most appropriate for each question,
follow the instructions to determine your profile and a suggested investment asset mix or portfolio.
List all Plan ID# related to objective:
Investment Knowledge
If you have a high level of investment knowledge, you have a good understanding of the relative risk of various types of investments and understand how the level of risk taken affects potential returns.
If you have very little knowledge of investments and financial markets, speculative and high-risk investments and strategies are likely not suitable options for you.
1. Which statement best describes your knowledge of investments?
Subtotal: 0
Investment Time Horizon
The length of your investment time horizon impacts the types of investments that may be suitable for you. If, for instance, you had a time horizon of greater than three years, you would have a greater degree
of flexibility when building a portfolio (although risk tolerance and investment objectives must also be considered). If you have a short time horizon, more conservative investments like GICs or money
market funds may be a more suitable option for you. Choose your investment time horizon.
2. When do you expect a need to withdraw a significant portion (30% or more) from your investment portfolio?
Subtotal: 0
Investment Objectives and Asset Mix
Your savings objectives are the goal or result you want to achieve from investing. Knowing your savings objectives will help you determine your investment asset mix and the types of investments best suited to meet your needs. The investment products used to meet your savings objectives can have varying levels of risk and potential returns
3. What is your primary goal for this portfolio?
Subtotal: 0
Comments:
Risk Capacity
Your financial situation includes your assets, debts, and your income, including the stability of your income which are all important when determining how much risk you can take with your investments. In addition, the larger the portion of your total assets that you are investing, the more conservative you might wish to be with this portion of your portfolio.
Your financial situation includes your assets, debts, and your income, including the stability of your income which are all important when determining how much risk you can take with your investments. In addition, the larger the portion of your total assets that you are investing, the more conservative you might wish to be with this portion of your portfolio.
4. What is your annual income (from all sources)?
5. Your current and future income sources are?
6. Estimate your net worth by adding Liquid Assets (cash and investments) plus Fixed Assets (home and other real estate less total Liabilities (mortgages, personal loans, credit card debt and all other debts)?
7. How would you classify your overall financial situation? The option you choose should reflect your current % of debt to assets.
For example, if you have Investor A and B each with a net worth of $1,000,000. Investor A has a net worth that consists of $2,000,000 in assets and $1,000,000 in debt representing a 50% debt to asset ratio. Whereas Investor B has a net worth that consists of $4,000,000 in assets and $3,000,000 in debt representing a 75% debt to asset ratio.
8. The market value of the investment account/plan(s) covered by this questionnaire represents approximately what percentage of your total savings and investments?
Total savings and investments include all the money you have in cash savings, GICs, savings bonds, mutual funds, stocks, and bonds. (Total savings and investments include all the money you have in cash savings, GICs, savings bonds, mutual funds, stocks and bonds).
9. What is your age group?
Your age is an important consideration when constructing an investment portfolio as it relates to your capacity for risk. A younger investor may have a portfolio with a higher percentage of equity type investments in their asset mix to maximize the potential for growth with the understanding that should their portfolio drop in value, the longer investment time horizon provides an opportunity to recover any losses. An investor who is retired or near retirement may be less able to withstand losses and thus may desire a portfolio that is invested to maximize income and capital preservation. (Your age is an important consideration when constructing an investment portfolio. A younger investor may have a portfolio that is primarily invested in equities to maximize potential growth if they also have a higher risk tolerance and long investment time horizon. An investor who is retired or near retirement may often be less able to withstand losses and may have a portfolio that is invested to maximize income and capital preservation.)
Subtotal: 0
Comments:
-
Assessing Your Risk Capacity
Risk Attitude
Your comfort level with risk is important in determining how conservatively or aggressively you should invest. Generally speaking, you need to consider accepting more risk if you want to pursue higher returns.
If you decide to seek those potentially higher returns, you face the possibility of greater losses.
10. In making financial and investment decisions you are:
11. The value of an investment portfolio will generally go up and down over time. Assuming you invest $100,000, how much of a decline in your investment portfolio
could you tolerate in a 12-month period?
12. When you are faced with a major financial decision, are you more concerned about the possible losses or the possible gains?
13. The chart across shows the greatest one year loss and the highest one year gain on four different investments of $10,000. Given the potential gain or loss
in any one year, which investment would you likely invest your money in:
14. From September 2008 through November 2008 and again from February 2020 through March 2020, North American stock markets lost over 30%. If you currently owned an investment that lost over 30% in 3 months, would you:
15. Investments with higher returns typically involve greater risk. The 4 charts below show a hypothetical annual return (annual gains and losses) for four different investment portfolios over a 10-year period. Keeping in mind how the returns fluctuate, which investment portfolio would you be most comfortable holding?
Subtotal: 0
Comments:
Assessing Your Risk Attitude
The questions around hypothetical gain/loss scenarios are meant to gauge your comfort and attitude towards risk.
The maximum score for this section is 60.
Interpreting the results
You may find that there is a disconnect between your risk capacity and attitude towards risk. For example, you may express an appetite for risk, scoring high on risk attitude, but your score for risk capacity is low. Conversely, you may have a high capacity for risk but score lower for risk attitude. Your risk profile should reflect the lower of (a) your willingness to accept risk (attitude) and (b) your ability to endure potential financial loss (capacity).
General Plan KYC Guidelines
| Time Horizon: | |
| Investment Objective: | |
| Risk Tolerance: |
What’s Next
If you’ve just completed the IPQ, well done! The next step is to evaluate your current investments and compare them against your investor profile.
At this stage, changes to your existing portfolio may be necessary to make it consistent with your newly defined investment objectives.