The Perception and Reality of Risk Tolerance

Affluent investors generally think of themselves as moderate risk takers, but often take a more conservative investment stance, according to a new Spectrem Group ezine, High Net Worth Investor's Risk Tolerance in a Volatile Market.

Wealthy investors are nearly three times more likely to describe themselves as moderate than to say they’re conservative or aggressive investors, yet a closer look at their investment preferences reveals a more conservative mindset. Nearly half (48 percent) of investors participating in Spectrem Group attitudinal surveys indicate they are unwilling to put any assets at risk. Our research also finds that a significant share of self-described aggressive investors prefer a moderate balance of capital preservation and asset growth.

Investors across the risk continuum are more likely to weigh the potential downside of investment decisions, and two-in-five indicate they’ve moved mostly toward a more conservative portfolio within the last few years. Although half of affluent investors say they have not changed their tolerance for risk since the economic crisis, two-in-five indicate an unwillingness to take on more investment risk.