Covisum President Joe Elsasser, CFP® recently contributed an article to WealthManagement.com, "Explain Risk To Clients Now," discussing how clients often have unrealistic downside expectations and some of the possible investment mistakes that can be made without properly analyzing their portfolio. He answers questions about effectively estimating a client's risk, what clients need to know about risk, how much a portfolio could lose in a particular period, diversification, and historical portfolio data.
Here's and excerpt:
"A well-equipped advisor can help clients “practice” for an inevitable downturn. New market risk software products, like SmartRisk, help advisors reasonably assess the downside risk of an investment portfolio and test the client’s retirement income plan to determine if the client likely would be faced with unacceptable changes in living standard... Having these conversations with your client now, while we’re in a bull market, will help you move prospects to the planning process and expand your relationship with current clients."