Do you know what’s worse than losing your money? As one of my mentors used to remind me, it’s the individual investment advisors losing it for you! Having been in the business and working closely with investors for 25 years, I’d have to say that is especially true when the investor doesn’t have a good read on exactly how much risk they have at stake in their personal portfolio.
Accurately capturing the “riskiness” of a portfolio is challenging enough. Investment managers and advisors have been experimenting with ways to measure risk before it is too late for many years . Adding further complexity for advisors comes with accurately diagnosing how much risk their clients’ comfort level will allow are actually comfortable taking.
A 2013 study by Cerulli Associates, involving several thousand advisors and investors, produced some startling results. The study concluded that there was an enormous disconnect between how much risk the advisor’s believed their clients wanted to take and how much risk the clients were actually comfortable taking.
Miscommunication of this magnitude creates a significant risk that clients will find out how precarious their portfolio actually is only after seeing a dramatic decline in value. The likely consequence of this sequence then includes the selling off of investments at significant losses and an extremely irritated—and perhaps even litigious--investor. This is truly where the pain of losing money becomes real.
At GuardVest, we feel your collective “pain” when it comes to losing your hard earned money and want to help. A simple subscription to our app-based service can keep you informed and up-to-the-minute on how your investments are being managed. All for a cost less than a one-month subscription to Netflix. Make a choice to live pain free and try a 30-day trial of GuardVest today!
If you have a story you would like to communicate about the mismanagement of your portfolio expectations and performance, please share it with us below in the comments section and we’ll respond in kind.