The Changing Risk Preferences of High-Net-Worth Individual Investors During the Global Financial Crisis

This paper studies how high-net-worth individual (HNWI) investors changed their risk preferences during the Global Financial Crisis (from 2007 to 2009) and asset allocation evolved in same period. We had access a confidential database from Swiss international private bank with two samples of questionnaires (suitability tests) filled by HNWI 2009. compared suitability tests’ suggested investment profiles those investors’ real allocations at moments time. estimated correlation coefficients ran hypothesis tests examine if changes period were statistically significant. Findings: period, but gap between self-assessed preference narrowed, suggesting that they have convex value function curve. found evidence consistent psychological risk-as-feelings model, as lower risk-exposed also tended decrease level crisis. The suggests stronger for cash crisis confirming results focused on importance liquidity external shocks.