Page 18 - South Mississippi Living - April, 2017

COASTNOTES
FINACIALFUTURES
Risk Tolerance Questionnaires – Why Bother?
story by Suzie Sawyer
Figuring out your tolerance for
risk is one of the most important, and necessary, first steps to take in your relationship with your financial advisor. Beyond this first step, revisiting your risk tolerance at least annually is equally important.
While reexamining your risk tolerance can seem overwhelming,
it is important to understand the types and amount of risk you are
able to shoulder when your financial advisor recommends investments for your portfolio. Building a portfolio consistent with your specified risk tolerance helps both you and your financial advisor manage expectations for things like returns, volatility, time horizons, liquidity, etc.
You and your financial advisor should complete a risk tolerance questionnaire at least annually, or anytime you experience a significant life event. While comparing the answers to previous years to see
if any shifts have taken place, you may discover that your answers vary depending on current market conditions. This potential variance is an excellent talking point in a conversation about risk and the
management of expectations. Utilizing reports, such as retirement
projections, gives your financial advisor an idea of whether your investment portfolio, constructed according to your risk tolerance, will potentially allow you to meet your financial goals. It is certainly not uncommon to realize that if you would only tolerate more risk you would have a greater probability of meeting your goals and objectives.
However, taking on or tolerating more risk is not the answer. The answer is to let your stated
tolerance for risk help manage your expectations. Instead of taking on more risk, talk to your financial advisor about reevaluating your goals based on what you believe is most realistic given your current lifestyle. This may mean working for a few more years, saving instead of spending more, or readdressing your monthly retirement spending goal.
Finally, please don’t hesitate to ask for assistance from your professional financial advisor who can provide clear, objective advice and answer any questions you might have in pursuing your financial goals.
Article provided by Suzie P. Sawyer, Managing Director/Investment Advisor Representative of Trinity Investment Services, LLC, who can be reached at 228.864.4460. Securities offered through Century Securities Associates, Inc., Member SIPC and FINRA, a subsidiary of Stifel Financial Corp.
Home Office: 501 North Broadway, St. Louis, Missouri 63102, 314.342.4051.
18 SOUTH MISSISSIPPI Living • April 2017
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