Section 19 in Pension Fund Regulatory and Development Authority (Retirement Adviser) Regulations, 2016
19. Risk profiling.
- Retirement Adviser shall ensure that,-(a)it obtains from the prospects or subscribers, such information as is necessary for the purpose of giving retirement advice, including the following:-(i)age;(ii)income details;(iii)existing retirement savings/ assets;(iv)risk appetite/ tolerance;(v)liability/borrowing details.(vi)dependent family members(vii)life/health insurance details(viii)any other relevant information in the risk profiling sheet as specified in fourth schedule as amended by the Authority from time to time.(b)it follows a process for assessing the risk, a prospect or subscriber is willing and able to take, including:(i)assessing a prospect's capacity for absorbing loss;(ii)identifying whether prospect is in a position to understand the concept of market risk involved in the process of investment;(iii)appropriately interpreting prospect's responses to questions and not attributing inappropriate weight to certain answers.;(iv)is able to understand and appreciate that retirement plans involve long gestation period, and early liquidation or exit, from the scheme is not beneficial.(c)where tools are used for risk profiling, it shall be ensured that the tools are fit for the purpose and any limitations are identified and mitigated;(d)any questions or description in any questionnaires used to establish the risk that a prospect is willing and able to take are fair, clear and not misleading, and shall ensure that:(i)questionnaire is not vague or use double negatives or in a complex language that the prospect may not understand;(ii)questionnaire is not structured in a way that it contains misleading questions.(e)once the assessment is done, risk profile of the prospect is communicated to the prospect;(f)risk assessment is updated periodically on the basis of the information provided by prospects or subscribers.
