In fact, the underuse of client information - it being gathered at onboarding and then filed away seldom to be seen again - was a problem highlighted by both attendees and the expert panel. They agreed that it is not that wealth managers aren’t gathering the relevant information from clients, more that it is not being utilised optimally.

For Seb Dovey, managing partner of Scorpio Partnership, the risk-profiling issue boils down to the management of client data and he in fact believes that this will be a key differentiator moving forward. “For me, the next decade is about data, data and more data…data is going to become king in the wealth business,” he said. In his view, capturing all the business benefits which enhanced risk-profiling can bring is about “making your business a better knowledge management company” and recognising that risk-profiling “is not a something static”.

Dovey also noted that it may be time to adjust the positioning of risk-profiling, both to clients and within the industry itself. “Let’s stop calling it risk-profiling as frankly that’s a passion killer,” he argued, suggesting that the term “opportunities profiling” might better encapsulate what the process is all about.

Of course, risk-profiling is at a very basic level about avoiding regulatory censure and it would seem that the industry still has some way to go in ensuring that it is fulfilling these requirements. By way of illustration Steffen Binder, co-founder and managing director at MyPrivateBanking noted that his consultancy had carried out a “mystery shopper” exercise a few years back which yielded some very disappointing results. Having sent “clients” with a hypothetical €1 million ($1.2 million) to invest to 25 firms, it was found that only two of them carried out a structured survey or questionnaire-based risk-profiling procedure. More shockingly still, nine of these firms – among which were international institutions – asked these mystery clients no risk-related questions at all. Having performed a similar (although unpublished) study more recently, Binder said the findings had been similar.

Contradictory variables

“Things haven’t changed really,” said Binder, “it’s a truly international problem.”  For him, risk-profiling needs to be revolutionised so that the various and often contradictory variables concerned can all be addressed. He explained that the first of these strands is the “relatively stable” amount of risk a client will have to take on to garner a certain return; the second is the “highly unstable” level of risk the client sees the market as representing; the third is their risk capacity, and the fourth is their risk tolerance. This last variable, in his view (and that of many academics now) is that risk tolerance is actually “a personality characteristic, which is actually quite stable.”