What is your understanding of whether your investments could fall in value?
This question gets to the heart of whether your clients truly grasp one of the most fundamental concepts in investing: risk. When clients respond with “Not sure” or “I wouldn’t ever expect my investments to fall in value,” it’s a clear sign they might not yet feel confident in what they’ve been told or how it’s been explained.
Let’s look at three ways to build more clarity and confidence in this area.
1. Make risk feel real not theoretical
It’s easy for clients to nod along when they hear “investments can go up and down,” but what does that really mean to them?
Try this:
Talk through a real-life example. For instance, “Let’s imagine you invest £10,000 in a typical balanced portfolio. In a bad year, it could drop to £9,000 or less—how would that feel?”
This grounds the concept in real numbers and emotions, helping clients connect the dots between theory and impact.
2. Set expectations early and revisit them
Sometimes clients hear what they want to hear, especially if the initial conversation is focused on goals and returns. Risk needs equal airtime.
Try this:
During your initial meeting (or a review), clearly state:
“To grow your money, we’re taking on some level of risk. That means some years it’ll be up, and some years it’ll be down.”
Then check in with a question like, “How do you feel about the idea of your investment dropping in value at times?”
That check-in reveals whether the message has landed—or if it needs reinforcing.
3. Use your risk profiling tools as conversation starters not conversation enders
Risk questionnaires can be helpful but they don’t guarantee understanding. If a client scores “balanced,” it’s still important to unpack what that means in real life.
Try this:
Once you’ve discussed their risk score, ask:
“This profile suggests you can tolerate some short-term losses in pursuit of long-term gains. Does that match how you feel if your investments dropped, say, 10%?”
This invites clients to reflect and respond, and gives you a chance to clear up any mismatch between their score and their comfort level.
Summary: Help clients answer with confidence
When clients say, “I understand my investments could fall in value,” they’re not just repeating words they’re showing true comprehension. To support that:
Ground the concept in real examples
Revisit expectations regularly
Go beyond the risk score and explore how they feel about loss
Clarity around risk builds trust and ultimately leads to better, more sustainable decisions.