Just a few years ago, testing a client's risk tolerance through hypothetical bear market projections seemed a bit too ... hypothetical. It can be hard to truly measure a client's investing confidence when his portfolio plunges 23% one year and 21% the next- if the planner and the client know it's all a game.

"At the time, it seemed a little ridiculous to me," investor Les Hickok says of the 2005 exercise arranged for him and his wife by their new planner, Derek Kennedy of Knoxville, Tenn. But the stress-test, designed to show how long the retirement savings of Hickok and his wife would last, was prophetic. The Hickoks told Kennedy that they remained confident in their disciplined rebalancing strategy, but for countless Americans, the engineered fears became reality.

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