The Ontario Securities Commission's Investor Advisory Panel has chosen financial planning software firm PlanPlus to look into investor risk tolerance assessment practices.

PlanPlus has been asked to review current practices to better understand how people in the Canadian investment industry assess a client’s tolerance for risk, and it is now seeking responses from individual advisors in an online survey.

"We believe that through this study the information learned will help to better recognize the landscape of risk assessment in Canada, and will ultimately aid firms and advisors to achieve a better understanding of their clients," reads a statement issued by PlanPlus.

Because of inconsistencies in the use and understanding of various risk-related terms, the survey has set out several specific definitions. For example, risk tolerance is "the willingness of the client to take on risk" while risk preference is the client's "gut feeling” towards or against taking a specific risk, and risk perception is the "judgement which the client feels towards the severity of risk".

“To complete the research on current practices in Canada we need feedback from licensed MFDA and IIROC firms,” says PlanPlus president and CEO Shawn Brayman, who is the leader of the risk tolerance project. “If you represent an interested firm we hope you will respond positively if we reach out to you.”

The survey for advisors is available at www.planplus.com/media/AdvisorRiskSurvey.pdf