Measuring financial advice: aligning client elicited and revealed risk

The AFS Conference will feature speakers, symposia, and several special sessions. Among them, we will introduce a new panel session for PhD students, highlighting how to best navigate the job market.
With the generous support of our sponsors, the Academy has awarded several best paper awards during past meetings and we anticipate continuing Best Paper awards in 2021.
We will continue with our Emerging Scholar Award to a current graduate student for promising research work on a paper or poster presented at the conference.

Keywords

Short Description

Financial advisors use questionnaires and discussions with clients to determine a suitable portfolio of assets that will allow clients to reach their investment objectives. This paper compares client Know Your Client (KYC) profile risk allocations to their investment portfolio risk selections using a value-at-risk discrepancy methodology. Value-at-risk is used to measure elicited and revealed risk to show whether clients are over-risked or under-risked, changes in KYC risk lead to changes in portfolio configuration, and cash flow affects a client's portfolio risk. We demonstrate the effectiveness of value-at-risk at measuring clients' elicited and revealed risk on a dataset provided by a private Canadian financial dealership of over 50,000 accounts for over 27,000 clients and 300 advisors. By measuring risk discrepancy, we can determine how well a client's portfolio aligns with their stated goals.