Confidence is a measure of how capable and comfortable investors feel about their ability to make good financial decisions. Confidence is also an indicator of potential vulnerability.
Outputs:
The assessment places investors into three Confidence categories from Low to High.
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Low |
You have low confidence, which means you may have limited experience with investing, be relatively unaware of current market conditions, and might require more guidance or background information when considering your options. |
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Medium |
You have medium confidence, which means you tend to be reasonably sure in your ability to make good financial choices, but may occasionally feel uncertain about the best course. |
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High |
You have high confidence, which means you are generally happy making complex choices, considering a lot of information, and weighing many options. |
How to use it
Confidence impacts the Suitable Risk Level (also known as Risk level on our API documentation) indirectly by feeding into the investors’ Knowledge & Experience score.
Investors’ with lower Confidence are likely to have lower Knowledge and Experience and if Knowledge and Experience is Low or Medium, it might be appropriate to reduce investors Suitable Risk Level, until sufficient experience and Confidence is gained.
Users of the Knowledge and Experience and Financial Circumstances assessment will find that the system automatically adjusts the Suitable Risk Level to account for Confidence and K&E. Advisers who don’t use these assessments should consider investors’ Confidence as part of the their own K&E assessment and in turn how lower levels of K&E impact the Suitable Risk Level.
Confidence also indicates how much help investors might need and investors with Low Confidence are likely to require more guidance and support. You should also avoid burdening Low Confidence investors with too much choice and complexity and it is better to focus on the bigger picture and discuss long-term goals rather than focussing on individual investments and short-term performance.
Conversely investors with High Confidence are likely to be comfortable making investment decisions and may even want to be involved in the decision making process. High Confidence investors are likely to be more interested in the underlying investments and comfortable discussing technical information and performance.