Posted on November 6, 2018

Financial Planning: Chapter 2


By David Janus, Director of Financial Planning, Financial Advisor

Today, I want to spend more time discussing the second part of our Series on Financial Planning. For the first post in this series click here. When we begin the process of creating a Financial Plan for a client, we start here with a risk tolerance questionnaire. The reason being that we want to get to know our clients tolerance for risk.

What is risk? In casualty insurance, this is the risk of loss, or replacing tangible property. In business insurance, risk typically means lost revenue, physical property damage to the building, or possibly the accidental physical harm to a patron. In our definition, risk means an investors tolerance for volatility, or the ups and downs of the market, as it relates to their investments, because at the end of the day each client has an individually crafted portfolio based on their risk.

Our founder, Mark Schlipman, often describes risk with cookies. When you see a plate of fresh-baked cookies, your mind might tell you to eat one or two, then five cookies later, your stomach is upset because you ate too many cookies.

The reason we start here is because often, clients and investors think of Financial Advisors as Money Managers – what we really do is help guide our clients to make the best financial decision they can, given the limits they have (Life’s Trade-off Decisions). At the end of this series, we will show you why and how we help our clients make the most of what they have.

To learn more about your Risk Tolerance, click here to take our Risk Survey.