Managing skittish clients

Michael Kitces| Pinnacle Advisory Group | 17 September 2012

The anchor point for all investment advice is understanding each client's risk tolerance. Yet in practice, many advisors find that anchor point often feels like it's drifting.

As the saying goes, clients are risk tolerant in bull markets and risk averse in bears. Guided by this common sense, many advisors eschew risk tolerance questionnaires completely, except to meet minimum requirements posed by their regulators. And most advisors find these questionnaires of limit...