What is a Risk Profile?
Your risk profile represents the intersection of your psychological tolerance for investment volatility, your financial capacity to absorb losses, and your expectations for returns over time. Getting this right is fundamental to investment success.
FinaMetrica Risk Profiling
We use FinaMetrica, a globally-recognised psychometric questionnaire, to scientifically assess your risk tolerance. This research-validated tool measures your psychological responses to investment scenarios, providing an objective foundation for portfolio recommendations. It separates emotional responses from intellectual understanding—both matter.
Why Risk Profiles Matter
A portfolio that doesn't match your risk profile creates two problems: too conservative and you may not reach your goals; too aggressive and you may panic-sell during downturns, locking in losses. The right profile helps you stay invested through market cycles—which is where long-term returns come from.
Strategic Asset Allocation: The Industry Standard
What is Strategic Asset Allocation?
Strategic Asset Allocation is the process of setting long-term target allocations between asset classes—shares, property, bonds, cash—based on expected returns, risk, and correlations. This approach is used by professional investment managers globally, including the vast majority of MySuper superannuation funds in Australia.
These allocations are typically set for 10- to 20-year horizons, recognising that short-term market movements are largely unpredictable, but long-term asset class returns tend to converge toward historical averages.
Valuation Considerations
While Strategic Asset Allocation acknowledges that valuations matter, professional managers generally maintain their mandated allocations through market cycles. Valuation is accounted for in part—through rebalancing and sometimes tactical tilts—but funds stick to their core allocation framework.
Key Point: Most managed funds and MySuper products operate on Strategic Asset Allocation—and generally pay limited attention to current valuations. This approach has merit: it removes emotion, maintains discipline, and works well across most market conditions.
The WSP Investment Process
Our process builds on Strategic Asset Allocation foundations but adds layers of research, adjustment, and personalisation. Each step adds value and rigour to your portfolio construction.
From Risk Assessment to Your Portfolio
Step 1: FinaMetrica Assessment
Your investment journey begins with a comprehensive risk profiling questionnaire. This psychometrically-validated tool identifies your genuine risk tolerance—not what you think it should be, but how you actually respond to investment scenarios.
Step 2: Delta Factors Research
Formerly Farrelly's Investment Strategy, Delta Factors provides quarterly research on asset class valuations and portfolio efficiency. This research informs whether current market conditions warrant adjustments to standard allocations.
Step 3: WSP Adjustment
We adjust for investment availability and platform constraints. Not all investments are available on all platforms, and flexibility varies. We optimise within these practical realities to achieve your target allocation as closely as possible.
Step 4: Total Portfolio Approach
The final layer considers your complete financial picture: existing assets, tax position, entity structures, income requirements, life stage, and personal preferences. This transforms a model portfolio into your portfolio.
Seven Risk Profiles: Returns & Risk Expectations
The following table presents return expectations and risk parameters for each of the seven standard risk profiles. These figures are based on current market research (December 2025) and incorporate Delta Factors methodology. All figures are before fees and taxes.
| Risk Profile | Allocation | Income Return |
Growth Return |
Total Expected |
$100k Base Case (10yr) |
$100k Pessimistic |
1-in-20yr Drawdown |
1-in-50yr Drawdown |
|---|---|---|---|---|---|---|---|---|
| High Conservative Profile 1 | 4.2% | −2.0% | 4.18% | $124,750 | $118,149 | −8% | −15% | |
| Conservative Profile 2 | 4.1% | 0.35% | 4.45% | $128,569 | $109,859 | −10% | −18% | |
| Moderate Conservative Profile 3 | 4.0% | 0.63% | 4.63% | $131,434 | $103,461 | −13% | −22% | |
| Balanced Profile 4 | 4.0% | 0.79% | 4.79% | $134,049 | $97,730 | −16% | −27% | |
| Moderate Growth Profile 5 | 3.9% | 0.96% | 4.86% | $135,720 | $88,974 | −20% | −34% | |
| Growth Profile 6 | 3.7% | 1.16% | 4.86% | $136,273 | $80,728 | −24% | −40% | |
| High Growth Profile 7 | 3.4% | 1.49% | 4.89% | $136,798 | $67,966 | −32% | −53% |
Understanding the Risk-Return Trade-off
The Total Portfolio Approach
The Total Portfolio Approach recognises that everyone's financial situation is unique. It integrates your risk profile with our service framework and your complete wealth picture to create truly personalised advice.
The Service Cube
The level of advice and services you want or need at any given point in your financial journey. Life isn't linear—sometimes you need intensive advice, sometimes just maintenance. The Service Cube adapts to where you are right now.
The Wealth Pyramid
A conceptual and technical analysis of your complete financial position—at a point in time or across your lifetime. From foundations (cash flow, protection) through accumulation to distribution, the pyramid ensures nothing is overlooked.
Our Service Models
We offer flexible service arrangements to match your needs and preferences. Choose the level of engagement that works for you.
Connect
Stay connected without ongoing commitment. Portal access, digital vault, and property/vehicle updates. One-off setup covers KYC compliance.
Contact
Fixed 12-month engagement to keep your file active and compliant. Includes "Pro" app features like live banking feeds.
Report
Formal documentation of your position. Retirement projections, summaries—factual and general, not personal recommendations.
Advice
Personal recommendations, strategy documents, Statements of Advice. Charged on time basis for full transparency.
Investment Management Models
The Advised Approach
Working with a professional portfolio model. We manage the investment selection and rebalancing within your agreed risk profile and strategy.
Between the Flags
For situations where updates are infrequent or there is less control over investment options. We work within platform constraints.
Directed
You participate in the portfolio process—in full or part. Sometimes called "Private Client" or "Bespoke". For those who want hands-on involvement.
📌 A Note on Foundations
For any investment strategy to succeed, certain foundational elements must be in place: adequate cash reserves, appropriate insurance protection, debt management, and estate planning basics. While this document focuses on investment portfolios, remember that some level of "Foundations" analysis is essential before committing to any investment strategy.