“The essence of portfolio management is the management of risks, not the management of returns. All good portfolio management begins and ends with this premise.”

-Benjamin Graham, The Intelligent Investor
 

Managing Risk

What does risk mean to you?  On the face of it, it’s an easily definable term.  Risk, practically, is the effect of uncertainty upon objectives.  But risk is personal – each of us defines it in our own terms.  Perhaps the best way to understand risk is to ask yourself:  ‘what keeps me awake at night?’  This is different for everyone: for some it is the uncertainty that their capital will erode before they achieve their financial goals; for others, it’s the exposure to concentrated holdings in a portfolio; and for still others, it may be the inability to adequately transfer their wealth to future generations.  We get to know you, and we get to know what risk means to you.

Our reviews put your portfolio through a “Stress Test”, wherein we discuss a number of factors:

  • 20% market correction
    • When was the last time the portfolio was rebalanced?
    • When was the last time your asset allocation was reviewed?
  • Increase in interest rates
    • How rate-sensitive is your portfolio?
  • Life events
    • Do you have an up-to-date will?
    • Are there beneficiaries identified on your accounts?
    • Who is your executor?  
    • Are there any capacity issues to be dealt with?
    • Do you have a power of attorney?  Is he or she located in Canada?
    • Who is our contact in the event you aren’t able to act on your own?