Employability

Two clients can have identical income and identical savings, and still have genuinely different capacity to take investment risk. One difference the workbook singles out is employability.

A well-qualified, multi-skilled professional can usually find a new job, or a new source of income, reasonably quickly if things go wrong. Someone with narrower, less transferable skills, or in a shrinking field, has a harder time bouncing back.

The more easily a client could recover their income after a setback, the more investment risk that client can reasonably afford to carry.

The workbook places employability inside its Personal Information group of risk-appetite factors, in Table 18.1, alongside age, nature of job, knowledge about markets, and psyche. Its stated rule: "well qualified and multi-skilled professionals can afford to take more risk."

The logic behind the rule is about recovery, not about income level itself. If a client's portfolio takes a hit and, separately, their job or business also comes under pressure, a highly employable client has a realistic path to rebuilding income quickly — through a new role, a new client base, or a related field. A client with narrow, non-transferable skills, or one working in a single declining industry, does not have that same fallback, so a given loss hurts their overall financial position for longer.

This is one input among several in the same table — it sits next to, and is assessed together with, nature of job (steady versus unpredictable employment) and regularity of income, not as a stand-alone score.

Two clients, both aged 35, both with a portfolio of Rs 30,00,000 and similar annual savings.

Mr Kapoor is a chartered accountant with experience across audit, taxation and corporate finance, and has changed employers twice already without difficulty. If his current firm were to shut down tomorrow, he could reasonably expect a comparable role within a few months.

Mr Fernandes is a specialist machine operator for one particular, ageing technology used by only a handful of factories in his city. If his factory closed, his narrow, non-transferable skill set would make re-employment at a similar income level considerably harder.

All else being equal — same age, same capital, same goals — the adviser can reasonably assign Mr Kapoor a higher risk capacity than Mr Fernandes, purely on the strength of employability, even before looking at either man's psychological willingness to take risk.

Chapter 18 (Risk Profiling for Investors), Table 18.1, "Factors affecting risk appetite," lists employability under Personal Information with its stated influence on risk-taking capacity. Expect a question matching a factor name to its effect on risk appetite, or a scenario question where two otherwise-similar clients differ mainly in qualification and skill transferability.

• Employability is a capacity factor (can the client afford the risk), not a willingness factor (does the client want to take the risk). Keep the two families of factors — family/personal/financial information versus psychological willingness — separate when answering.
• It is distinct from "nature of job." Nature of job is about how steady the current job is; employability is about how easily a new one could be found if the current one ends.
• Higher employability raises risk capacity, but does not by itself set the actual asset allocation — that still runs through the client's overall risk profile and goals.
• Do not treat this as purely about income level — a high earner in a narrow, easily-disrupted field can have lower employability-driven risk capacity than a modestly-paid but broadly-skilled professional.