What’s Your Risk Tolerance? Take the Brexit Test

By 2009 investors were fully aware of financial risk; whether they remain awake to its nature for another generation, as they did after the market collapse of 1929-1932, or for less than a year, as they did after 2002, remains to be seen.

Financial adviser and author William Bernstein wrote that in his 2010 book, The Investor’s Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between. Six years later, Brexit has burst on the scene to provide a fresh read on investors' awareness of, and reactions to, risk.

Reports from fund families such as Fidelity Investments and T. Rowe Price, robo-advisers such as Wealthfront Inc., and advisers at much smaller firms don't suggest panic. Fidelity said that last Friday customers made 2.25 buys for every sell; the ratio fell to 1.67 on Monday, then rose to 1.88 on Tuesday. At Wealthfront, far fewer clients even logged into their accounts than did during last August's market turmoil, when about a third logged in, the company said.

But resilience gets tested in the face of unsettling news, and we're likely in for a long and chaotic stretch. Now's the time to assess how you felt and what you did, if anything, the day Great Britain voted to exit the European Union, and what you might be tempted to do in the coming weeks and months. Two years out—10 years out—will you look back on your reaction with satisfaction or regret?