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Financial Risk Management

A Guide to Financial Risk Management & Capital Preservation

A Guide to Financial Risk Management & Capital Preservation

Financial risk management and capital preservation share the same goals: keeping your investments safe. We use different strategies to manage investment risks and preserve your wealth, because there
are many different risks. When you work with our financial advisors, you can rest assured that we’re already taking steps to minimize financial risk to you. When you invest in assets, you’re doing it for a short- or long-term gain. But you also want to think about
downside protection, because every investment carries some risk. In fact, even keeping your money in a savings account puts you at risk because inflation will decrease the value of your money over time.

Identifying & Managing Risk

The first step in financial risk management is to identify the potential risks. Next, we analyze their effects on your investment holdings and create a strategy to mitigate them. When you think of risk, you probably think about the risks the stock market poses. But did you know that one of the biggest threats to growing wealth is the cost of taxation?

Our financial planners consider the whole financial picture, helping you preserve more of your wealth.
This includes taxation, insurance, and investment risk management.

How Risk Management Works

Risk management for your investment portfolio involves the use of different strategies. One component is portfolio diversification to reduce business and industry risk. If you invest a majority of your holdings in one company or industry, you significantly increase your overall risk. By investing in a variety of companies and industries, you significantly reduce your risk.

Another way to manage risk is to use a buy-and-hold strategy. If you keep your assets for a longer period of time, you can ride out the highs and lows of the market and improve your chances of positive results. Selling assets in a short amount of time can also lead to capital gains tax, which reduces your net gain, which is another reason to hold on to your portfolio for the long haul.

Finally, our financial advisors understand that the asset allocation changes with age. People in their 20s and 30s have more time to recover from setbacks, and they can afford to take more risks. An age-based asset allocation helps mitigate the market risk. If you’re nearing retirement, you will switch your allocation to low-risk to protect the wealth you’ve already built.

Why Capital Preservation Is Important

Investment risk management strategies can navigate business and market risks, but they also deal with inflation risks. The problem with keeping your money in a savings account, even if it’s an interest-bearing account, is that your money will lose in value because of inflation. The goal of your investment portfolio is to increase your wealth. At the very least, you want to preserve the wealth you have.

FAQs about Financial Risk Management

What’s the Biggest Risk to Building Wealth?
The biggest factor that’s stopping you from building serious wealth is probably taxation. Between income taxes, capital gains tax, and estate taxes, your wealth can take a serious hit every year. Financial risk management is not complete without taking taxation into account. There are always things you can do to reduce your tax burden, but you have to work with a financial expert.

How Can I Preserve My Wealth?
If capital preservation is your primary concern, our financial experts can help you. We will devise a comprehensive strategy to preserve and grow your wealth. This includes planning for taxes, insurance, and investment-related risks. With your portfolio, you want to use proper diversification, hold your
assets for a long time, and switch your allocations to a lower risk level when you are near retirement age.

Is Investing in Stocks Risky?
Investing is not risk free, but it’s the best way to build long-term wealth. When you leave your money in
a bank account, your money will lose value in the long haul. Basically, your costs go up but the money to
spend on those costs does not.

We Specialize in Investment Management

We Specialize in Investment Management

We specialize in financial risk management and capital preservation. Our financial advisors are trained to protect and grow your wealth for you. Call us today to make an appointment and talk about how we can
help you.