Broker Check

Historical Perspective on Risk Tolerance

| June 12, 2018
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If your chosen career were test pilot or high-wire performer you would be someone who is not adverse to risk. However when it comes to your retirement, “risk” requires a new perspective, where success means balancing your risk tolerance with the risk which may be necessary.

At One Financial Services, our clients concern about risk is tempered by our use of Betavest software to assess the probabilities of a successful retirement.

By using historical statistical modeling we are able to determine if the current withdrawals from the investment portfolio we are sustainable for the duration of the client’s life expectancy

From a representative portfolio, using asset class and asset class history dating back to 1926, we are able to demonstrate through rolling-period-analysis if the withdrawals the client is anticipating will be sustainable by using all of the historical periods available to be tested.

For example a 60-year-old may have a life expectancy to age 85, or a 25 year life expectancy. Dating back to 1926 we have 25 year rolling cycles: From 1926 to 1951 and so on including the most recent ending in 2016 dated back to1991.

That data provides us with 65 rolling periods 25 years in length where we can test if the current strategy being subjected to the current with drawls would have been successful during those 25 year periods.

This Betavest testing is used to determine the allocation strategy we propose and recommend for or clients. 

We customize the design of the portfolio and our resulting recommendations to the point where we can observe a high probability of a successful outcome based on the historical observations. 

At One Financial Services we fine-tune our client’s exposure between equity and fixed income asset classes in a manner which balances the high probability with consideration to each individual client’s emotional attitudes about risk exposure by taking in to consideration the client’s unique set of facts.

Think of it as a financial stress test…without any slips or tailspins.

At One Financial Services we’re here to help keep you and your future on track while you pursue your goals.

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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG, LLC, to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Copyright 2018 FMG Suite.

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