Zoe Financial Gives Insight on How a Wealth Manager Can De-risk a Portfolio

NEW YORK, Dec. 1, 2020 /PRNewswire/ -- Understanding the value of de-risking a portfolio can be challenging after years of a growth-focused investment approach. Yet, as the end state of an investment goal approach, so too does the importance of reducing volatility in the portfolio. A wealth manager can be invaluable in de-risking stages of a client's portfolio. The portfolio management process, which involves creating a bespoke strategy based on a client's goals, should also include a careful evaluation of risk tolerance and capacity. After all, as much as one might be able to afford to take more significant risk, it is essential to have a strategy that one can stick to through volatile times.

The Value of De-Risking

A wealth manager considers not only the financial aspects of de-risking, but the tax planning it might entail. De-risking a portfolio is part of the many services that come with a tailored investment strategy and broader financial plan. It aims to preserve and protect wealth after it is accumulated. There is no point in aiming to grow one's wealth if when you are ready to enjoy the fruits of your labor there is a high possibility that it will be lost when the markets are volatile. 

The de-risking process keeps the accumulated wealth secure and protected from market volatility. To create and follow a strategy that makes sure the client's wealth makes it through the ups and the downs. The different phases in the saving and investing process call for distinct ways and means of managing risk.

A wealth manager looks at a portfolio where it stands and assesses the risk relative to where the client or investor is in their life stage, or when they need to withdraw the funds. 

For instance, a portfolio to buy a house in five years will look different from that of a retirement portfolio with a 20-year time horizon. A wealth manager looks at a portfolio where it stands and assesses the risk relative to where the client or investor is in their life stage, or when they need to withdraw the funds. 

These strategies go beyond the traditional stocks to bonds transition to mitigate risk. De-risking a portfolio requires pursuing a multifaceted approach in reducing the risks within an asset class as well.

Near Retirement? De-Risk Your Portfolio

Mainly when retirement is close, a way to de-risk is to keep liquidity high and volatility low. While there are various frameworks for how to do this most effectively, there is great value in reducing risk and establishing a predictable retirement income. Doing so creates a safety net for emergencies, as it means keeping enough cash on hand to cover two to four years' worth of expenses. This allows for flexibility to manage unforeseen costs without having to liquidate stocks under less-than-ideal conditions. It de-risks a portfolio by giving it enough time to recover from those conditions. And during that time, cash retains its value. 

About Zoe Financial

Zoe Financial understands that each client has a different financial situation. This is why fiduciary financial advisors in Zoe's Advisor Network never create generic plans for their clients. A noteworthy aspect of Zoe's advisor vetting process is an in-depth review of the types of plans advisors often create for their clients. In fact, Zoe Financial rejects 95% of advisors who are unable to build holistic and thoughtful financial plans.

Zoe Network Advisors take the time to understand what their clients' needs are, what their current financial situation is, and what their financial goals are. Individuals can feel confident that their financial plan is right for them when all of this information is taken into consideration. Additionally, Zoe Financial works hard to match their clients with the right advisor. 

Not only do they hire the top 5% of fiduciary financial advisors, but they also pair their clients with advisors with similar experiences. All the client has to do is fill out a short form and Zoe's algorithm will choose the top three advisors that are best equipped to assist them. From there, they can interview the financial advisor to confirm that it's a good fit. By hiring the right financial advisor, the client has completed the first step in making a financial plan that's right for them.

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SOURCE Zoe Financial

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