Managing Portfolio Risk

Managing Portfolio RisksPortfolio Risk Management is an extensive topic that is rarely addressed properly in wealth management. Most advisors talk about managing risk, but then never address the issue further. Because of the importance and depth of information surrounding this topic, we are currently working on an audio as part of our client educational series. The Audio will be entitled Understanding Portfolio Risk Management. If you would like a copy of the audio when it becomes available, please let us know. We will be happy to send you one.

Until then here are a few things to consider regarding managing risk:

  1. Gain an understanding of the types of risk that exist. There are many types.
  2. Learn which of those types of risk could be beneficial verses detrimental to your portfolio returns.
  3. Determine the exact measure the risk of your current portfolio.
  4. Determine how your current portfolio is diversified and why.
  5. Determine where your current portfolio falls on the Markowitz Efficient Frontier
  6. Decide on your level of risk tolerance.
  7. Formulate an Investment Policy Statement – This is a written plan of action that you or your advisor will take based on various portfolio results. It makes sure that both you and your advisor know the exact strategies to be undertaken regardless of market conditions, and it eliminates emotional decision-making during potentially stressful situations when poor decisions could easily be made based on emotion rather than logic.

Ask us about the Free Market Investment Analysis that completes these tasks for you in a simple easy to understand manner.


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