Helping a Customer Deal with Risk and Investment Decisions

When advising an investor, it is imperative to understand their attitude and behavior towards risk and why they want to invest their money. The investment advisor must ensure that the client understands that returns come with a certain level of risk and that the level of risk increases as the level of risk also increases. Unsuspecting investors are misadvised into putting their money in investments that guarantee very high returns at low risk. Essentially, low risk and high yields do not coexist. The safer the investment option, the lower its returns will be.