When selecting equity investments, advisers should also consider stylistic diversification by selecting a mixture of equities considered value and growth. While growth has been in the driving seat over the past decade or so, it will not take much for growth to fall out of fashion so it would be wise for positions to be spread across both growth and value. 

In summary, risk is an essential and welcome component of successful investing as it generates returns for your clients. But we also know that it is one of the hardest nuts to crack, which we see very clearly when looking at DIY investors’ portfolios.

Determining the appropriate level of risk your client should take is one of the main ways that advisers and investment managers add value, and avoid the seven deadly sins that DIY investors succumb to. 

David Miller is an investment director at Quilter Cheviot