Understanding and explaining risk to clients By Renaud "Ron" Piccinini, PhD Why should advisors care about explaining risk? Clients typically don't know how to feel about their portfolio returns. If they made a 5% return last year, should they feel good or bad? The answer to that question lies in the amount of risk that has been taken. Think about it like this — a young man comes home and tells his parents that he earned $500 last week. How should they feel about it? It depends. If he earned it mowing lawns, his parents should be proud. But, if he won a bet with his friends on a game of Russian roulette, his parents should have a much different response.