Developing an Asset Allocation Strategy for Retirement

Developing an Asset Allocation Strategy for Retirement
Today, investor risk profile questionnaires are designed to determine clients’ risk tolerance based on their attitude to risk, their age, and their time horizon. Most of these questionnaires, however, miss one key aspect of developing the asset allocation strategy. How much risk do clients need to assume in order to meet their financial objectives?

Clients who have accumulated large portfolios and have modest income needs during retirement may be able to meet their financial objectives with a relatively low-risk portfolio. On the other hand, there are no guarantees that clients with greater income needs would be better served with a more aggressive portfolio. Tolerance for risk generally decreases with age and retirement.