In my experience, the most important component of a successful client relationship is a clear understanding of risk tolerance and return expectations. Unfortunately, that tolerance isn’t static: it’s frequently influenced by market conditions and/or emotions like fear or complacency.
In January of this year, when the stock market was rocketing to new highs almost daily, most of us felt comfortable taking greater risks. But all of that changed seemingly overnight last month, leaving us with little clarity about the impact of the health crisis on our financial future. It’s no surprise that investors started leaning towards a more conservative approach.
For most of us, risk tolerance resides somewhere between complacency and fear, and an effective long-term strategy should take all possible scenarios into account. Something that can be incredibly helpful for both you and your advisor is to evaluate your risk profile in good times as well as bad to see how your tolerance might change based on market conditions.
Take a moment to see what your risk profile looks like by filling out our risk tolerance questionnaire. You’ll find a link at the bottom of this page. If you are a client of Trident Advisors, we can revisit your profile when the skies clear a bit to see how your perspective has changed and find the right middle ground for you. If you are not yet a client, feel free to forward your results to your current advisor or give us a call so we can discuss how we can help.
Stay centered, stay healthy and stay the course!
Joseph C. Paul
Chief Investment Officer