One number, produced from a questionnaire, standing in for three separate questions. It demonstrates well and it hides the two that matter most.
Capturing disposition. How someone describes their relationship with volatility, in a calm room, with nothing happening.
That is real information and it belongs in the file. It is not nothing.
Capacity. How much loss the plan can absorb before the plan stops working.
Capacity is arithmetic. Time horizon, required withdrawals, fixed obligations, and flexibility in the goal. It has no relationship to how the client feels, and two people with identical questionnaire answers routinely have completely different capacity.
Behaviour. What the client actually does when the decline is happening rather than hypothetical.
People are poor predictors of their own conduct in conditions they have not experienced. The questionnaire asks them to be exactly that.
Tolerance is stated. Capacity is calculated. Behaviour is revealed. A single number implies all three agree.
Administer the same questionnaire to the same person in a rising market and a falling one and you will frequently get different answers.
Some of what the score captures is the date it was taken.
Because a number is concrete, it demonstrates well, it fits in a proposal, and it produces a documented artefact for the file.
Those are genuine benefits. The mistake is treating the artefact as the analysis.
Use it as one input. Calculate capacity from the plan separately. Ask directly about past behaviour in previous declines, which is revealed rather than stated.
Then reconcile the three, in writing, where they disagree. The disagreement is where the advice actually is.
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