Risk Tolerance Profiling
I am an Investment Adviser Representative at Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor (RIA) based in Fairfield, IA. I am also registered with Cambridge Investment Research, Inc., an independent broker-dealer with over 3,000 registered representatives nationwide.
Most clients pay fee-only or an hourly rate. The size and complexity of the client’s wealth management and financial and retirement planning determine that fee.
Some clients pay a commission, mainly those with smaller accounts, i.e., Roth IRAs, some public-school teachers with 403b retirement accounts, or parents or grandparents who set up a 529 college savings plan.
The first introductory and fact-finding appointment can be in-person or by phone. The next meeting where I provide my recommendations should be in-person. (For the time being, telephone, Zoom, and email are replacing some in-person meetings.)
Subsequent meetings during which we monitor your progress and investments can be done in-person or by phone, email, Zoom, or Skype – or, more likely, a combination of these meeting types.
As a professional financial advisor for 30 years, I build custom portfolios, trusts, and retirement plans for individuals, couples, families, and groups. I can access thousands of mutual funds, exchange-traded-funds (ETFs), stocks, bonds, retirement plans, life insurance programs, and annuities.
Psychologist Daniel Kahneman was awarded for pointing out what some of us intuitively knew already: people dislike losing money more than they like making money. Aversion to financial loss is one reason I give each of my new clients a risk tolerance questionnaire to complete. For you would not want a portfolio that is 80% in stocks which might lose 30% in a bad year when your risk score indicates you would sell everything if it dropped even 5%.
Disdain for loss can also hinder a client from wanting a portfolio at all for feat it might not grow fast enough to reach one’s fiscal goals. As a financial advisor I need to alert my clients to possible pratfalls and provide them with solutions: save more, take more risk, diversify more, depending on each client’s individual situation.
Risk Profiling System
My risk tolerance profiling system generates a personalized assessment of an individual’s risk tolerance. It provides an opportunity to gauge if their current investments are too hot or too cold.
The evaluation consists of two-time horizon questions and six risk tolerance questions. It only takes a few minutes to complete. Upon completion, you receive a detailed report that includes your risk tolerance score.
After you receive your score, I can transfer it to an asset allocation mapping system to convert your score to a portfolio. I then use fi360’s proposal report to compare your current assets to the portfolio generated from your risk tolerance score.
*Diversification, rebalancing, and asset allocation strategies do not assure a profit or protect against loss. 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.