Understanding your appetite for financial risk is a critical component of the wealth management development phase. At Morgan Newfield we will help you to determine a risk capacity that considers a number of factors such as your responsibilities, investment objectives and personality.
Define your risk profile
Identifying your ability to assume financial risk will act as the starting point for all future portfolio related decisions. Your wealth advisor will develop a strategy that seeks to provide a satisfactory return on investment whilst avoiding an uncomfortable level of risk. In simple terms, the reward for committing to a higher level of financial risk is the potential of generating a higher rate of return. It is your personal ability and circumstances that dictates your willingness to take on more or less risk that is comfortable to you and your environment.
Balance between risk & return
Creating the perfect balance between the risks assumed for the potential return is a difficult concept to comprehend. As your wealth advisor we will help you to find a suitable level where your capital is put to work without exceeding your level of comfort. To achieve this medium your wealth advisor will analyze your present and future financial capabilities, assess your needs and ask you as series of questions that help to determine your tolerance towards risk.
What to expect
Helping your wealth advisor to fully understand your financial position will deliver a more favorable outcome as your strategy develops. Our questions are not meant to be intrusive, on the contrary, the answers of which are important in measuring your level of tolerance. Your wealth advisor will typically ask you to explain your positions of the following:
- Cash flow : Present and future income alongside liabilities for the same
- Maturity and expected performance for current investments
- Investment goals and the likelihood of life events
Although our assessments are not limited to these factors, we require an understanding of these dimensions that will serve to develop metric based assumptions on which decisions will be made by your wealth advisor: