How Much Risk Do Clients Need?

Aaron Klein co-founded Nitrogen and led the company to 42 straight quarters of growth as its first CEO. He was named by Investment News as one of the industry’s 40 under 40 executives, and the Wealth Management Industry Awards honored him as CEO of the Year in 2023.

Help them embrace it to reach their goals.

By Aaron Klein and Dan Bolton
The Holistic Guide to Wealth Management

We face risks every day in our lives, from getting into our cars, to eating meals prepared at a restaurant, to flying in planes, to attending parades, sporting events and concerts. Rather than burying our heads in the sand, most of us get on with our daily lives by making calculated assumptions about what risks are safe and manageable and which ones are reckless.

When it comes to our money, however, risk plays all kinds of games on our emotions and often triggers our fight-or-flight response. The Securities & Exchange Commission defines financial risk as “the degree of uncertainty and/or potential financial loss inherent in an investment decision.” In general, as investment risks rise, investors seek higher returns to compensate themselves for taking such risks.

Dan Bolton is vice president of corporate marketing at Nitrogen. He is the creator of the Fearless Investing Summit, one of the most dynamic and well-attended conferences in the wealth management profession, and launched the pre-eminent benchmark Advisor Growth Survey.

MORE Rory Henry and The Holistic Guide to Wealth Management
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So, if you’re thinking of adding an investment advisory component to your accounting practice, just know that being crystal clear about each client’s unique tolerance for risk is the first step toward getting them invested properly.

What is risk tolerance?

Risk tolerance is an investor’s ability (and willingness) to endure market fluctuations and potential losses without abandoning their investment plan.