Wednesday, April 12, 2006

"Rethinking Risk Tolerance" by Michael Kitces

Do you think that your client's risk tolerance is the only thing you need to know about your client's relationship with risk?

Think again, says Michael Kitces in "Rethinking Risk Tolerance," Financial Planning (March 2006). There's a big difference between your client's risk tolerance and his or her risk capacity. Act carefully when tolerance and capacity point you in opposite directions.

Kitches advises combining a risk tolerance questionnaire with a maximum-decline approach.

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2 Comments:

Anonymous Anonymous said...

Susan:
of the Newton Weiners, or the Townsend?

Just wondering...

11:22 AM  
Blogger SusanW said...

Neither. I'm from upstate New York.

4:00 PM  

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