Wealth Management

When managing portfolios, we believe risk deserves greater consideration over returns, given that historically, the risk of portfolio components such as stocks and bonds, are greater than their respective returns. Likewise, when determining an appropriate risk profile for a client, we believe certain factors deserve a higher level of consideration. These factors include investor risk tolerance, liquidity needs and the current state of the economy.

The risk tolerance of the client includes the ability to take on risk, the comfort level with the volatility inherent in investment risk and the psychological composure with risk taking. Liquidity needs include the need for cash equivalents and/or income at any given time. The state of the economy is the current assessment of the macro economy relative to its position along the business cycle.

We believe the distribution of returns across time is not normal, meaning the state of the economy in regard to the business cycle is relevant to the possible distribution of outcomes for any given year rather than a purely random, or “normal” distribution. Thus, depending on the state of the economy, we may advise clients to reel in risk relative to a client’s normal risk profile. This may impact our recommendations to clients for overall risk in addition to what we choose to hold in our portfolios.

By prioritizing risk tolerance, liquidity needs and the state of the economy, we believe you will experience a progression towards your goals with less volatility and outsized setbacks that can impede or even sometimes halt your progress all together due to the human tendencies of behavioral finance.

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