Foundation risk profile

I didnt know foundations can have “willingness” to take risk. You learn something new every day. (CFAI exam 2004)

Action speak louder than words…exam their investment portolio holdings will offer some clue about their willingess to take risk.

yea I saw that and thought it was weird too. I guess for institutional if it states something about their willingness should we be addressing it apparently?

ws Wrote: ------------------------------------------------------- > Action speak louder than words…exam their > investment portolio holdings will offer some clue > about their willingess to take risk. NOT TRUE

comp_sci_kid Wrote: ------------------------------------------------------- > ws Wrote: > -------------------------------------------------- > ----- > > Action speak louder than words…exam their > > investment portolio holdings will offer some > clue > > about their willingess to take risk. > > > NOT TRUE you are probably using schweser. I did all exams and explicit statements always overwrite previous holdings

yea i don’t agree with that either ws, cfai past exams never take investment actions into consideration. even though i know schweser tries to drill that in.

Hmmmm…even in the absence of explicity statement from the sponsor??

I would say if there is not an explicit statement from the sponsor about willingness you do not need to consider willingness however if there is you should address it.

There was an individual IPS from a past exam (pre 2005) where the guy described himself as having an average willingness to take risk, but he was big in high risk small caps. The answer was an above average willingness to take risk - despite his explicitly stating an average. Granted this was an individual and not a foundation, but I think it still applies to the discussion. comp_sci_kid Wrote: ------------------------------------------------------- > comp_sci_kid Wrote: > -------------------------------------------------- > ----- > > ws Wrote: > > > -------------------------------------------------- > > > ----- > > > Action speak louder than words…exam their > > > investment portolio holdings will offer some > > clue > > > about their willingess to take risk. > > > > > > NOT TRUE > > you are probably using schweser. I did all exams > and explicit statements always overwrite previous > holdings

which one is this? I did from 2000-2006 and don’t remember reading anything like this. But I think it can be like that (actions can speak louder then words) depending on how it is worded. I do specifically remember one from CFAI in which he had like 60 percent in empoyer stock and they said below average since he said he made a statement not wanting to lose too much money.

I would always write Willingness AND Ability.

Really even if for institutional IPS they say nothing about willingness? Have you done past cfai because they seem not to address it.

i remember… he was the 50 year old doctor… I tried to put average willingness … but it was above average…

do you remember which exam it was?

That was Mr. Stephenson if I remember Oh and yes I usually say as much as I can remember the Willingness…

That was one of the past cfa exam questions excerpted in Schweser exam book 2. He did say average, but he had all the small cap. And the answer was average. This contradicts the “words” over “actions” principle. I am confused here too.

i think he was originally Above Average due to High willingness and High Ability… But then he loses abunch of money and then his sh!t changes

Yeah, he was a surgeon who was surprised when told small cap stocks were risky. 3rd & Long Wrote: ------------------------------------------------------- > i remember… he was the 50 year old doctor… > > I tried to put average willingness … but it was > above average…

AbbeFaria Wrote: ------------------------------------------------------- > Yeah, he was a surgeon who was surprised when told > small cap stocks were risky. > > 3rd & Long Wrote: > -------------------------------------------------- > ----- > > i remember… he was the 50 year old doctor… > > > > I tried to put average willingness … but it > was > > above average… exactly, you cannot assume that ‘Hey i am below average, and i think equity investments are below average’ will mean willingness below average, but when i say Shortfall not more then 12% then it is below average

Sadly there is no silver bullet for an IPS