Client risk profile – the Portuguese case effect of wealth and health factors on the investor´s risk profile

Abstract

This consulting project, Client risk profile – the Portuguese case - Effect of wealth and health factors on the investors’ risk profile, commissioned by BPI Asset Management, investigates the most relevant factors that determine the risk aversion of Portuguese investors. Using qualitative and quantitative research methods, we demonstrate why the average Portuguese citizen tends to be excessively risk-averse compared to their European peers. The quantitative analysis was based on our survey’s results. A multiple linear regression using various factor variables allowed us to analyze the effect of each factor on the Portuguese investor’s risk aversion and the correlation between them. Next, individual portfolios were designed for the different risk profiles, maximizing return while respecting the maximum drawdown desired by the investors and calculating the VaR. The individual component focuses on a deeper way on the effect of wealth and health on the investor’s risk profile and analyses the different existing types of wealth and health and the ones that are more impactful.