Public Employee Risk Tolerance: Aligning Your 403(b) and 457 with Your Pension
By Tim Hayes, Financial Advisor for the Public and Not-for-Profit Sector
Is your 403b or 457 portfolio positioned too conservatively—having all that guaranteed income in the bank? For public employees, your risk tolerance isn’t just about feeling good—it’s about balancing the safety of your State Pension income and potential new Social Security benefit against the growth you need from your personal 403(b) and 457 accounts.
The Public Employee Advantage: Your Pension Is Your Safety Net
My job as a financial advisor is to outline options—take more risk, save more, diversify differently—while helping you keep in mind that you have all this other guaranteed income (Public Employee Pension and Social Security), which gives you time to make up for stock market drops and possibly take more risk with your 403b or 457 plan.
Let’s evaluate if your new Social Security benefit allows for more growth-oriented choices in your 403b account.
The Psychology of Investing: Understanding Loss Aversion
For some people, nothing feels worse than watching their account drop; others regret missing out on gains. If that sounds familiar, your portfolio may be too hot—or too cold—for your true risk tolerance.
Psychologist Daniel Kahneman (Nobel Prize in Economics, 2002) showed that people feel losses more intensely than gains. His work with Amos Tversky, who passed away before the Prize was awarded, demonstrated that loss aversion can lead investors to abandon a plan at the worst possible time.
My Process: A Clear, Objective Framework for Alignment
From Questionnaire to Portfolio: How It Works
- Web-based risk questionnaire: 8 questions produce a personalized risk score and report.
- Score → portfolio: I map your score to a target asset-allocation model using my planning framework.
- Side-by-side review: Using fi360’s proposal report, I compare your current holdings to the risk-aligned portfolio and highlight differences in allocation, diversification, and costs.
What You Receive: Clarity, Comparison, and a Custom Plan
- Your risk tolerance score and plain-English report.
- A target allocation aligned to your score.
- A side-by-side comparison of your current portfolio vs. the target, with observations and next steps.
- My recommendation: fine-tune or make broader changes—always in line with your goals and comfort zone.
- Ongoing review: at least annually, because jobs, goals, and risk tolerance change over time.
My Process (At a Glance)
- Complete the 15-minute web-based risk questionnaire.
- Review your score and report together.
- Map the score to an allocation and build a comparison via fi360.
- Decide on adjustments (risk, savings, diversification) and implement.
- Revisit at least annually or when life changes.
What's the Right Investment Mix for You?
Before building your portfolio, it helps to understand your goals, risk tolerance, and timeline. This questionnaire takes just a few minutes and ensures any recommendation is built around your unique situation — not a one-size-fits-all approach.
Calculate My Risk Score→
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Forthcoming, Proactive, Dedicated
Tim has served as my financial advisor for many years. He is experienced, knowledgeable, competent, flexible and proactive. Tim sends to me, via email and on a regular basis, secure and thoroughly organized “Client Reports” of my “Combined Account Portfolio.” If I have trouble understanding any part of my Portfolio or have questions regarding it, he is always available to explain what I don’t understand and answer my questions. Tim is forthcoming with his emails advising me on any changes to my holdings that could be more beneficial to me, given the particular state of the financial market at the time. Because of his experience and knowledge, he can be and is proactive with his advice. He allows for a flexible schedule and has met with me in person during times when needed. Over the many years of working in my career and setting up savings funds for the future, saving funds for my grandchildren, retiring from my career and setting up appropriate savings vehicles, Tim has always been there to advise and help. I believe Tim is dedicated to doing what’s best for his clients and their financial investment needs and goals.
Pat Barbour
Client
Testimonial Disclosure: Testimonials are based on individual client experiences and may not represent the experiences of all clients. They are not a guarantee of future performance. Each client’s situation is unique. No compensation has been provided for these testimonials.
Ongoing Partnership: Keeping Your Plan Aligned with Life
My investment ideas are only as good as their ability to keep up with you, so it all starts with getting to know you and your current investing situation. You may simply need your portfolio fine-tuned, or perhaps major changes are in order. Whatever the case, I’ll recommend a customized portfolio that addresses your needs and goals. And, as your financial advisor, I’ll commit to reviewing your portfolio at least once a year.
Life Moments We Plan Around
Whether you’re looking to change jobs, shifting gears into retirement, or already participating in an investment plan at work 403b, 457, etc.), you owe it to yourself and your family to make sure you’re doing the right things at the right time.
Schedule a Consultation with Tim Hayes
Fiduciary financial advisor with 35+ years helping Massachusetts public employees and educators with retirement planning. Fee-based, hourly, or commission — whatever fits your situation.
"My goal is to ensure your retirement plan is built on your best interests, not a product sale."
Schedule a consultation or call 508-277-5847.
These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice. Content provided via links to third-party sites should not be considered an endorsement of content that we cannot verify completeness or accuracy of.