May 21, 2025, by Helen Yang, CFA, Founder & CEO | Andes Risk
Why traditional RTQs may be putting your client relationships—and your practice—at risk
In a profession built on trust, every missed insight carries weight. And yet, too many advisors still rely on traditional risk tolerance questionnaires (RTQs)—a tool designed for a simpler, more stable market.
But today’s markets aren’t stable. They’re volatile, unpredictable, and emotionally charged. And today’s investors are more informed, more reactive, and more emotionally involved than ever before.
The Problem with Traditional Outdated Risk Tools
At their core, most RTQs reduce risk to a single number—often based on broad, hypothetical questions that fail to reflect how clients actually behave in real-life market conditions. The result? A dangerously incomplete picture of client risk. Here’s what they miss:
Behavioral Drivers
RTQs don’t reveal how clients feel or react when their portfolio drops 10% overnight. They fail to capture fear, overconfidence, or trend-chasing tendencies—key drivers of decision-making during market stress.
Emotional Response
Clients don’t always act according to their “risk score.” Behavioral factors like loss aversion, herd behavior, and emotional composure are invisible in traditional models—but critical during volatile times.
Personalization
Most tools sort clients into broad categories: conservative, moderate, aggressive. But clients are individuals, not segments. Their capacity, goals, and emotions are constantly evolving.
What It’s Costing Your Practice
These blind spots don’t just impact portfolios—they impact relationships, retention, and referrals:
- Client Mistrust: When the plan doesn’t match how clients feel during market dips, confidence in the advisor can erode.
- Misaligned Portfolios: Poor fits lead to reactive trades, churn, and unnecessary rebalancing.
- Lost Opportunities: In uncertain times, clients gravitate toward advisors who truly “get them”—and can coach them through the storm.
A Quick Scenario
Imagine a client with a moderate risk score. On paper, they’re fine with a balanced portfolio. But when the market drops, they panic and want to move everything to cash. The RTQ didn’t catch their low composure or high loss aversion. You didn’t see it coming—because your tools didn’t either.
Now you’re in reactive mode, not proactive coaching.
How Andes Risk Changes the Game
Andes Risk was designed to fix these gaps. With our patented 4D Risk Framework, we help advisors measure and manage four dimensions of client risk:
- Tolerance – the client’s stated willingness to take risk
- Capacity – their financial ability to absorb losses
- Perception – how they feel about risk in different environments
- Composure – how they’re likely to behave under market stress
By layering in behavioral finance and intuitive digital tools, Andes Risk empowers you to:
- Identify blind spots and emotional triggers before they create problems
- Tailor proposals and portfolios to match not just financial needs—but behavioral realities
- Reinforce trust with clients by demonstrating you understand how they think
Best of all, Andes Risk integrates this insight into your daily workflow—from proposal generation to IPS creation—so you can deliver personalized, proactive advice at scale.
In this market, you can’t afford to be blindsided by client behavior. And your clients can’t afford generic advice. The tools you use shape the trust you build. It’s time to move beyond outdated risk scores—and embrace a deeper, smarter, more human-centered approach to risk.
It’s Time to Fully Understand Your Clients’ Risk Tolerance – Take The Test
Take the test – use our comprehensive questionnaire and get your clients into the right investment strategies.
