At Intelligent Investing, we possess a profound understanding of the constant shifts in investor sentiment. Recognizing the tendency for increased risk tolerance during market upswings and a shift towards conservatism during downturns, we navigate the emotional cycle inherent in financial markets to provide comprehensive risk management as part of our exceptional wealth management services.
How Intelligent Investing Views Risk
At Intelligent Investing, risk management is at the core of our philosophy. We approach risk in four distinct dimensions, ensuring a comprehensive understanding tailored to your individual circumstances.
- Willingness to Take on Risk: This reflects your emotional connection to market volatility, or as I like to call it, your “sleep-at-night factor.” We recognize that excessive volatility can lead to discomfort and the temptation to abandon a portfolio, which goes against our desired outcomes.
- Ability to Take on Risk: This considers the practical aspect of risk. For instance, a widow with a substantial inheritance may have a high financial ability to take on risk, despite a low emotional willingness due to lack of experience.
- Need for Risk: Understanding your goals—categorized into needs, wants, and wishes—helps define your need for risk. This insight allows us to align your portfolio with your specific requirements.
- Portfolio’s Risk: We harmonize all these dimensions into a common risk number for your portfolio. This unique risk number signifies the level of risk you are comfortable with. Over a typical six-month period, we provide a transparent demonstration of your portfolio’s expected performance, both on the downside and the upside, ensuring alignment with your expectations.
Each client receives a risk number and an investor policy statement that we both agree to. The client agrees on how much risk they would like in their portfolio, and we sign agreeing to take said risk. Our proprietary integrations empower us to manage risk effectively, and we invite you to explore further with us. To kickstart this journey, we offer a complimentary risk assessment, taking the first step in building trust with you.
Managing Risk Effectively
Consider the dot-com era – investors believed they were gaining significantly, only to face substantial losses when the bubble burst. The importance of risk management cannot be overstated, and at Intelligent Investing, we approach it as an ongoing and integral responsibility.
Our Intelligent Risk Management Approach
- Valid Risk Assessment: We ensure an up-to-date assessment of your risk tolerance, acknowledging its potential changes over time.
- Capacity Analysis: Considering your capacity to bear risk, we assess how it impacts your likelihood of achieving financial goals.
- Risk Alerts: When our clients’ risk number is not in alignment with their current portfolio’s risk number, we are alerted, and may take action to either bring it more in alignment, or discuss whether an update is needed for your investor policy statement.
- Ongoing Conversations: Regular discussions about risk keep you informed and aligned with your financial strategy.
- Comprehensive Evaluation: We evaluate risk across all holdings, preventing overinvestment during market exuberance and panic-driven selling during lows, safeguarding your wealth.
Learn Effective Risk Management Strategies with Intelligent Investing
In conclusion, at Intelligent Investing, we champion a holistic approach to risk management, recognizing the ebb and flow of investor sentiment. Our four-dimensional perspective—assessing willingness, ability, need, and the portfolio’s risk—ensures a nuanced understanding tailored to your unique circumstances.
We navigate the emotional cycles of markets, emphasizing the significance of risk management, as evidenced by lessons from past market events like the dot-com era. This proactive approach is pivotal in protecting your wealth, preventing overinvestment in exuberant markets, and avoiding panic-driven selling during downturns.
With our proprietary integrations, we empower you to manage risk effectively, offering a transparent demonstration of your portfolio’s expected performance. Contact us today to embark on a journey of trust-building with Intelligent Investing through our complimentary risk assessment, as we prioritize your financial well-being and long-term success.
