It said for 60% of couples, men had the higher tolerance for risk. In almost 90% of the couples where there was a significant difference in risk tolerance, the man was the more willing to take risks.

“Financial advisers must consider the risk tolerance of each person in developing a financial plan and deciding on suitable investments. Each should complete their own risk tolerance test. Any differences need to be resolved before a financial plan can be finalised, otherwise problems could arise in the adviser relationship, as well as the marital relationship,” Finametrica co-founder Paul Resnik said.

“In the next market fall, the financial adviser could end up in hot water with both the lower risk tolerant partner and possibly with regulators if they recommended risky investments without the lesser risk tolerant partner understanding and agreeing to the plan.”

He said the answer for a lot of advisers was to switch to a psychometric test to determine risk appetite. But he said most New Zealand advisers had not taken that step yet. 

Instead, questions about risk tolerance were asked alongside those about timeframes, goals and general questions about what the client knows about investing.

He said that would throw out general conclusions. But a risk profiling test would measure the one attribute and tleave the other things to be resolved by the adviser. “Psychometric profiling allows them to have an open conversation.”

If a psychometric test showed one half of the couple had a lower risk tolerance, the adviser could then explore the consequences of that, he said, and work out the best solution for both halves of the couple with an open discussion.  “My guess is 99% of advisers don’t get the full benefit of that conversation. Only those who have psychometric testing have it set up. Others may get there but it's a hard way to do it.”

He said it was part of a shift from paternalistic advice to a collaborative approach.  “The old-fashioned way was to have the adviser telling the client what to do. Now they tease out the answers.”

He said: “A good risk tolerance test will take as little as 10 minutes, perhaps less, to complete. The report can reveal much information about each person and their financial selves. This self-awareness often empowers each person in the couple to be more involved with decisions about their financial future.”