Broker Check

The Value in Re-Evaluation

| July 09, 2018
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How Often Should I Reassess Risk?

Once you have your Risk Number, we can truly quantify your risk preferences and tailor a portfolio to match. Carrying the right amount of risk will set our clients up for long-term success, but over time an investor’s Risk Number can change. How often should you re-evaluate your Risk Number preferences, if at all? We want to share our knowledge and client experiences so that you can be aware of the best practices.

A reassessment of an individual’s Risk Number may need to occur after a potentially impactful life event, such as divorce, death, job loss, inheritance, marriage, etc. These major life events can have a lasting impact on a client’s financial position, and the position of their beneficiaries, for many years to follow.

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The Risk Number is generated by a number of factors, one of which is the investor’s actual financial standing. Major life events that affect an investor’s net worth, either up or down, have the potential to create a risk shift.

As the retirement horizon approaches, priorities may begin to shift. Planning for retirement is a very different animal than living it, and a re-evaluation could ensure that targets are still on track.

A person’s Risk Number may not be affected by impending retirement, but their Risk Capacity (the amount of risk they’ll want to take to reach their goals) could require attention. A client may need to take advantage of IRS “catch-up” rules so they can make greater contributions to retirement accounts, and emotionally, it’s difficult for some clients to shift from “amassing” wealth to “spending” it.

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Investors are some combination of stable (rational) and unstable (emotional). Stable investors will likely have stable Risk Numbers over the course of years, whereas the Risk Number for more emotional clients may swing a bit over time, depending on several factors. At Weston Banks, we want to be attuned to the psychology of our clients, and be flexible enough to change course while continuing to follow our designed “Yellow Brick Road” so to speak.


Please email your thoughts and questions to [email protected] or give us a call at 919-783-8500. Follow us on social media for more interesting content or visit our Weston Banks Wealth Partners website to see how we will work together for significance.

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