Be warned, says FINRA (the Financial Industry Regulatory Authority) to investors: ALL investments carry some degree of risk. The term risk, FINRA explains, refers to “any uncertainty with respect to your investments that has the potential to negatively affect your financial welfare.”
Here at Worley Erhart-Graves Financial Advisors (WEFA), we often remind clients of the following FINRA explanation: “The level of risk associated with a particular investment or asset class typically correlates with the level of return the investment might achieve. The rationale behind this relationship is that investors willing to take on risky investments and potentially lose money, should be rewarded for their risk.”
Often, we find, clients will use terms such as
“conservative”, “moderate”, or “aggressive” without really understanding either the true risk level inherent in each of their current investments or just how risk-averse they themselves actually are!
At WEFA, there are certain questions we help investors explore:
- How much could I lose if we have a market correction?
- How much money will I have at retirement if all goes as planned?What if it doesn’t?
- What might happen to my portfolio if interest rates rise?
- How protected am I with insurance – medical, property-casualty, long-term care?
One important service offered at WEFA is portfolio management. We establish accounts for clients at Charles Schwab & Co., Inc. as custodian. But, before any of that happens, the first step is to develop a customized investment plan based on each client’s needs and risk tolerance. Then, every year, we perform an in-depth review of the portfolio and present recommendations for rebalancing changes.
We firmly believe a comprehensive financial plan needs to be based on all aspects of one’s financial and personal resources and goals.We want to ensure clients put their money where their real risk tolerance level is!
Content was prepared by a freelance journalist on behalf of Worley Erhart-Graves Financial Advisors