Last fall, my husband Bob Casey and I went to lunch with Geoff Davey, co-founder and director of FinaMetrica, a risk-profiling company based in Sydney, Australia. Davey suggested that Bob and I probably have a similar risk appetite, what with both of us involved in financial services. (Bob was the founding editor of Bloomberg Wealth Manager; I'm just a reporter.) I said I probably had a higher tolerance for risk than Bob, based on my helter-skelter life. Even though he has more financial education and experience, his life seemed so settled compared to mine.

Davey suggested we both take the FinaMetrica risk profile. Then he would follow up with a "financial advisor" type meeting to talk with us about the similarities and differences and what they might mean. We thought it a great idea, though we'd never noticed any difficulty with financial decisions. Bob and I pool our money but keep credit cards and investments separate. In 29 years of marriage, we've never had an argument about money.

I was more interested in the professional implications than I was in the personal. I've been asked countless times to write stories and give speeches on risk, or on whether men and women have different styles of investment based on their attitudes toward risk. But I've never found an adequate way to write about how to match risk tolerance with investment choices or even how to measure risk. I've created a couple of risk quizzes for books that I've written. Most often, I say that risk is determined both by your financial capacity and some mysterious character trait that makes you a thrill-seeker or a cautious Charlie.

I've never believed that people are born with a risk tolerance in place. But talking to Davey and working with him on his quiz may change my mind. Davey believes that risk appetite is a psychological trait just like intelligence, personality, aptitude, attitudes and values. 

Of course, Davey doesn't see the risk score alone as adequate to determine risk tolerance. Rather, he sees it as a good way for an advisor to begin a conversation with a client couple. "In couples, sometimes there is a huge difference," he says. "If the husband and wife are different, the husband might say the wife is a wimp." 

That's one reason some husbands refuse to bring the wife in to the meeting. But Davey insists. The raw statistics for couples show that 60% of the time, there is a significant difference-one standard deviation-in risk tolerance. Of those cases, men were more tolerant in 45% of the cases, women in 15%.

Bob and I had our analysis meeting a couple of days later (on Skype because Davey was in South Africa by then). We had each predicted our risk tolerance score would be 65. The scores are set along a bell curve divided into seven groups: group 1 with a score of less than 25 and group 7 with more than 75.

> Davey told me that my actual score, 76, was higher than most-indeed, higher than 99.5% of the population. Bob's score was 61. As financial advisors know, each score dictates the percentage of growth in a portfolio that each investor might be comfortable with. As readers of this magazine know, when the amount of risk a client couple is willing to take doesn't match up with the amount they need to take, the advisor must work with them on coming to a compromise.

This was when I started wondering about the accuracy of my score. I had suspected going into the test that I was more risk tolerant than Bob. When that turned out to be true, I wasn't surprised. But as Davey went through the test with us, I wasn't so sure. Bob has a good deal more financial knowledge and experience than I do; if we were to merge our portfolios, I would certainly want him to manage the money. He's also a much bigger risk-taker when it comes to buying individual stocks. Thanks to his suggestions, my portfolio tripled in the late '90s.

The FinaMetrica test seemed sound to me. I believe it does say a lot about risk tolerance. What was the trouble then? There's one thing about Bob and me that is truly different: He is careful and cautious when driving, biking or pursuing just about any activity that we do together. I'm crazy. I ride my bike down a really steep hill just to see if I can get it up to 50 mph. I see myself as a big risk-taker but perhaps I'm more of a thrill-seeker: What can I get away with? The next time I ride my bike down the hill, it's got to be 51 mph. Bob is much more measured. All things in moderation. We typically agree on all financial decisions like college money for the kids, which house to buy, when to refinance, what kind of car to buy, what to do with retirement money.

Davey says the first thing he does with a couple, especially if they believe their scores are too high or too low, is ask them: "Do you think your score reflects your true risk tolerance?" If not, he takes them back to the test to see if they want to change anything. Ding! Ding! Many of Bob's answers on investment questions were more aggressive than mine. One answer stood out, though. Given a choice of seven investment portfolios going from 100% in cash and CDs to 100% in stock, I had chosen portfolio six, which is 70% stock and 30% bonds. Bob had chosen portfolio four: 30% stock, 40% bonds and 30% cash and CDs. I was surprised at Bob's choice because I've known him to be 100% in stocks. I looked at my own portfolio and saw that I was 60% in ETFs (including investments in several emerging markets, some gold and currencies), and 16% in mutual funds. That left 23% in cash. Not quite as aggressive as the portfolio I'd chosen.

Davey asked us about the discrepancy. Bob saw the question as what he might recommend to a client now. I saw it as what I would put in my own portfolio. So those numbers, perhaps some of the most important on the profile, didn't reflect much of a difference after all. I had 76% in growth and 23% in cash, nothing in bonds. That put both of us at just about the same place-portfolio six, with 70% growth and 30% bonds, or maybe portfolio five, which was 50% stock, 40% bonds and 10% cash. Not such a surprise then. 

Davey says FinaMetrica has a huge database. "We find that risk tolerance is stable," he says. "We tested individuals in the bull market up to 2007 and then the bear market from 2008 to 2009. Risk tolerance does not change." But the perception of risk may change. "In bull markets, people underestimate the risk involved; in bear markets, they overestimate the risk," he says. That's good news for financial advisors because changes in risk perception are something they can work with.

Although risk tolerance tends to be stable, life events like divorce or a death in the family can change risk tolerance, at least temporarily. "Clients should be retested every two to three years and after a major life event," Davey says.

The test alone does not determine risk tolerance, but instead the test and the discussion that follows. "The way to use it in practice is to do the risk tolerance test, talk about it, then set it aside." If a couple's appetite for risk deviates wildly, Davey suggests a conversation to find out how to compromise.

People with high risk tolerance are likely to be drawn to financial services, Davey says. They are also likely to be interested in money. For example, financial advisors test one standard deviation-or 10 points-higher than their clients, and the clients of financial advisors are typically five points above the average population.

Davey says tolerance to risk is a good predictor of success.

Advisors once thought that an increase in income and wealth drove higher risk tolerance. "But now we see it's the opposite; higher risk tolerance drives income and wealth. Public employees have low risk tolerance."

Regulators in the U.K. did a study of advisors who made "unacceptable" recommendations to their clients, Davey says. "They found that in half the cases the recommendation was unsuitable because of the low risk profile of the client and the high risk profile necessary to make that type of investment."

Davey was a financial advisor when the world markets dived in October 1987; the Australian stock market dropped by 40% in a single day. One of his clients came in after the crash and told Davey, "My wife went crazy. We have to sell everything." Davey sold. But his interest in risk was piqued by the crash and by that sale.

Davey began working on risk analysis in 1995, the year he started FinaMetrica with a partner. They brought their work to the U.S. in 2002 and now have 1,000 users in the U.S. The global financial crisis of the last three years has been very good for them, Davey says. There's more interest in the willingness and ability to take risk. FinaMetrica operates in seven different languages. The firm has 3,000 users around the world in 16 countries; 400,000 tests have been done since 1999.

So I guess the good news is that Bob and I are similar in risk tolerance. The big problem is that no matter how much we put in growth-say 100%-it's not going to bridge the gap.

Mary Rowland can be reached at She has been a business and personal finance journalist for 30 years and has written two books for financial advisors: Best Practices and In Search of the Perfect Model.