By now you should have completed a full fact-find, to help identify the investment goals and aspirations of the trust, and their priority. We should have established that the trustees are prepared to take some degree of investment risk to achieve the goals of the trust. If you do not wish to expose the trust's capital to any risk, then you should consult us regarding alternative savings opportunities.

The next important step is to understand the trustees' attitude to investment risk. While there are a number of different risks that we will account for, most people understand investment risk as the likelihood and extent of a fall in the value of their investment.

The tendency for investments to rise or fall in value is known as 'volatility'. Volatility is the opposite of stability. The more volatile an investment, the more extreme the rises and falls in its value. This means there is more chance of extreme losses, but also potentially higher gains. Lower volatility means greater stability and less chance of an extreme fall in price, but also less chance of higher gains. However, the longer the trust holds an investment, the lower the impact of that volatility. Helping the trustees find a portfolio that reflects a comfortable balance between potential gains and falls in value, requires finding a suitable risk 'benchmark'. Your adviser will discuss this in detail with the trustees in relation to the trusts specific goals; for example how would the trustees and beneficiaries feel if the goals were not achieved?

To help ascertain this risk benchmark, you may wish to complete the following questionnaire, ensuring all questions are answered. As trustees you may wish to consider individual or multiple questionnaires to meet your obligations to all the beneficiaries under the trust, as well as following an investment philosophy in line with the settlor's original wishes and intent. Beneficiaries may well have different time horizons as well as varying personal circumstances and beliefs. Although the trustees are not bound by any such request from a beneficiary, avoiding a certain sector (eg banks), country (Japan) or individual stock (a tobacco company) may well be something the trustees are able to consider. This can be overlaid onto any portfolio constructed once a risk assessment has been completed.

The resulting benchmark risk score will be between 1 and 10, with 1 being the most stable and 10 being the most volatile. A risk score of 1 will result in a portfolio consisting mostly of cash, while a risk score of 10 will indicate a portfolio very heavily weighted in shares. Scores between 1 and 10 will feature a broader mix of asset types.

The risk profile assessment is simply a guide based on information provided. We will explain what your risk benchmark score means in terms of potential gains and losses and help you decide whether to maintain, increase or decrease the risk level in the light of the particular investment goals of the trust.

1. Trustee Details

Title:
Full forename(s):
Surname:
 
Title:
Full forename(s):
Surname:
 
Title:
Full forename(s):
Surname:

2. Risk Profile Questions

1. How long do the trustees intend to hold on to this investment for the beneficiaries? This time period is very important in the risk assessment process.

2. Do the trustees have an emergency fund to provide for unexpected distributions, to avoid needing to draw on medium to long-term savings to meet immediate needs? (This amount should be the equivalent of at least three months net income.)

No
Yes - but less than three months' capital and income requirements
Less than six months' capital and income requirements
Around one year's capital and income requirements
More than two years' capital and income requirements

3. What is the trustees' expectation of the trust's income over the next five years?

We expect the income of the trust fund to decrease
We expect the income of the trust fund to keep pace with inflation
We expect the income of the trust fund to increase somewhat ahead of inflation
We expect the income of the trust fund to far outstrip inflation
We expect the income of the trust fund to fluctuate

4. What percentage of the trust's total assets are the trustees proposing to invest now?

Less than 25%
25% to less than 50%
50% to less than 75%
75% or more

5. Which statement most closely reflects the beneficiaries' current financial situation?

Completely loan free
Loan free, but with a few other obligations
Loans but no other debts that concern them
Long-term loans and some short-term obligations
A lot of long-term obligations

6. Which statement most closely reflects the trustees' objectives for this investment?

Stability is more important than higher returns
We want to achieve higher long-term returns than cash. We could cope with infrequent periods where our investments might fall in value
We want to achieve higher medium-term returns than inflation. We understand there may be occasional extended periods where our investments might fall in value
We want the best long-term returns we can get. We fully expect periods where the value of our investments might suffer extended falls

7. At the beginning of the year the trust has £100,000 invested. The chart and options below show the performance of four possible investments. Each bar gives a range of possible values at the end of the same year. Which investment would you prefer?

Potential best and worst case end values

This chart is for illustrative purposes only and does not reflect the performance of a specific index or fund.

Portfolio A: It could be worth anywhere between £93,000 and £113,000
Portfolio B: It could be worth anywhere between £85,000 and £125,000
Portfolio C: It could be worth anywhere between £77,000 and £137,000
Portfolio D: It could be worth anywhere between £69,000 and £149,000

8. What level of fall in the value of this portfolio over a one-year period would concern the trustees or beneficiary, bearing in mind that investment in shares requires a long-term view?

More than 5%
More than 10%
More than 15%
More than 20%
We are not concerned about falls in value as we expect to recover any falls by the time we need to realise the portfolio

9. Suppose one year ago the trust invested £100,000 in a portfolio. Today you've checked its value and find its now worth £87,000. Would the beneficiaries expect the trustees to:

Sell, and invest the proceeds in Cash
Sell part of the portfolio, and invest the proceeds in a less volatile investment
Sit tight, expecting the portfolio to recover
Move money from Cash to invest in the same portfolio at the lower price

10. The trustees are more concerned that the investments grow faster than inflation than about returns over any one-year period.

Strongly agree
Agree
Disagree
Strongly disagree

11. If the trustees could increase the chances of improving the returns by taking more risk, would the beneficiary wish the trustees to:

Take more risk with all of the money?
Take more risk with half of the money?
Take more risk with a quarter of the money?
Not take much more risk?

3. Your Investment Objectives

How much do you wish to invest?

(a) If you are investing for growth (eg optimised portfolio)

Is there a target amount you wish to achieve? If so, what is it? In deciding upon your target, please allow for the effects of inflation, investment risk and your tax position

When do you need this money, or how long do you want to hold this investment?

(b) If you are investing for income (eg yield portfolio)

What is your expected tax rate?

Starting
Basic
Higher

What annual yield do you require (after allowing for the specified tax rate)? %

You should consider how acceptable or otherwise the consequences would be if your investment failed to meet a given target (after allowing for personal tax). For investments subject to sharp rises and falls in price, this risk could be particularly significant, especially if you hold them for periods of less than ten years.

4. Signature

We will input your answers to the Risk Profile Questionnaire into the Risk Profiler, which will compute a suggested risk score and asset allocation. The risk score gives an indication of the level of risk you may be prepared to take with this investment on a range from 1 (low risk) to 10 (high risk).

As mentioned earlier, the risk score is only a guide, and you can decide, with our help, to invest more conservatively or more aggressively.

If you are happy with your answers and you agree to us using the information as stated in the above paragraph, please type I AGREE in the box below and submit the form.