WHAT IS RISK TOLERANCE?
Developed in 1999 by Professors
John Grable and Ruth Lytton to
assess financial risk tolerance.
Published in Financial Services
Review (FSR) and referenced in over a
hundred research publications.
Follow-up study in 2015 analyzed
160,279 investor responses and
confirmed the reliability of the RTQ.
Cronbach’s alpha score
Years in use
The RTQ results are scaled from 0 to 100, with 0 being the least comfortable taking financial risk and 100 the most comfortable.
The question responses should be used by an advisor to stimulate further discussion around risk with clients.
Advisors should use their best professional judgment in constructing an appropriate asset allocation based on the risk tolerance results, alongside other vital factors such as investment objective, risk need, capacity for loss and individual circumstances.