In 2012 Seeds of Advice began evolving the way it constructs its client’s investment portfolios from the industry standard strategic asset allocation (SAA) method to the innovative strategic risk allocation (SRA®) approach.
The SRA® approach permits the portfolio manager to extract full value from insights into ‘better’ investment products and ‘cheaper’ asset classes and from the flexibility to structure a better diversified portfolio by using the full range of available asset classes and strategies as circumstances allow or require. I build your portfolio according to exactly how much risk you need to achieve your outcomes.
However, the important questions to ask when evaluating risk are not necessarily the obviously investment related ones. Rather, you should take a much more holistic approach:
- Am I on track to achieve my goals?
- If not, how bad could it get and what can I do to get back on track?
- As it stands, will I outlive my savings?
- Am I exposed to any investment risk that might permanently compromise my ability to achieve my goals and objectives?
- How should I budget so that I can achieve my goals?
Understanding the interplay of risk tolerance, capacity and required risk in setting up your portfolio then helps in ongoing reviews and management.