VALUES & RISK ASSESSMENT
Beyond risk tolerance, risk preference
An institutional investment approach.
Three essential questions
When people think about investing, they tend to jump right to “What should I invest in?”
It’s easy to be dazzled (and possibly overwhelmed) by the possibilities. Should I buy Tesla? What about Bitcoin? What about actively managed vs. index funds?
And it’s easy to be caught up by investor psychology, which is hyped by the media day in and day out. If I don’t buy now, will I regret it? How low can this market go?
Without considering the proper context of your unique situation, these questions are unanswerable. In fact, they can actually be a distraction—and even a danger.
Before thinking about specific investments, we need to answer three essential questions.
Institutional investors, such as insurance companies and pension funds, always know the “why” behind investment decisions. There’s a larger financial purpose, and investments are there to serve it.
Individual investors also need to know their path. That means quantifying the financial decisions that support your vision for the future. Doing so can seem like an overwhelming task, but it’s essential. We help guide the process and make it easier.
The result is NOT static. Our lives change—in ways we like, and sometimes don’t like or can’t anticipate. An effective plan must reflect where you are today and accommodate change.
TV commercials from large financial service companies tell you that your money exists to let you walk on the beach during your retirement years. Yes, spending time how you’ve always wanted is an important goal for most people. But in our experience, clients’ desires go far deeper.
In most cases, family is the operative word. Often people value their children’s financial well-being higher than their own. They care about their kids’ education, about their own healthcare so as to avoid being a burden, and about leaving something behind.
All these and more must be quantified to the best extent possible—in dollars—without falling into the trap of false specificity.
Mike Tyson famously said, “Everyone has a plan until they get punched in the face.” Investors DO get punched in the face! Down markets can be painful, even when we remind ourselves to think longer-term as we remember there’s no such thing as higher returns with less risk.
In our approach, we focus on how much loss—in dollars and percentages—a client can endure for up to two years (since beyond two years, markets tend to recover, historically speaking). This is important, because over longer time periods, stock market corrections and economic recessions are a matter of when, not if, they will occur. Having a plan to navigate those periods is critical to long-term success.
We believe that notable companies generate a return for their shareholders over time and we embrace those fundamentals at EverNest. To create sustainable wealth, we leverage a deep understanding of the ever-evolving market and match that knowledge with your goals.
While financial planning and investing can feel complex and overwhelming, our goal is to inform and educate you as we partner to reach your financial goals. We believe this requires empowering you with the “whole story” behind both risks and potential positive outcomes.
No “bucket” can capture your unique situation.
Frequently Asked Questions
We use large, well known independent custodians: Charles Schwab and Fidelity. We don’t take custody of your assets. Rather, our role is to provide financial planning and make investment decisions.
While many investment professionals have extremely deep expertise in a particular type of investing such as managing private equity, hedge funds, convertible bonds, focused equity strategies, etc., we can complement their areas of expertise with other types of investments.
Investment professionals are so dedicated to creating outcomes for their clients in a competitive world, they are left with little time to provide the same level of attention to their own and their families’ financial situations.