Risk tolerance

Advisers often use one number to determine a client’s appetite for — and ability to absorb — market risk. And that’s a problem, Michael Kitces writes.

Everyone knows the mantra buy low, sell high, but they do the exact opposite because they don’t know their own risk tolerance.

Flawed questionnaires, conflicting interests, unclear regulatory stances — it’s a mess, but it can only get better.

Use upside and downside capture ratios to analyze potential investment products, as well as help those who are nervous feel calmer about their portfolio.

Advisers must be creative and persistent in figuring out risk tolerance levels.

Even after Congress phased out two popular claiming strategies, you should remind clients they can increase their benefits simply by being patient.

While the traditional way of gauging a client’s tolerance for risk is typically determined using a basic questionnaire, there’s another method that’s just as – if not more – reliable.