We examine whether and to what extent financial advisers can trust financial risk tolerance scores derived from client survey responses. We propose using the standard deviation of standardized survey responses as a simple, practical measure for determining the reliability of client risk tolerance measures. Our findings suggest that advisers will better discharge their fiduciary responsibilities by reexamining a client’s survey results if there is substantial variation in that client’s standardized survey responses and resurveying such clients to better gauge their risk tolerance scores.
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