How Much Stock Market Risk Is Just Right? With Dr. John Grable
All investing involves some level of risk. The role of the financial planner is to create a risk profile for investors so that investment recommendations match the investor’s financial and emotional aptitude. In this episode of the Stuff About Money podcast, Erik Garcia, CFP® and Xavier Angel, CFP®, ChFC, CLTC, discuss with Dr. John Grable, Ph.D., CFP®, of the Financial Planning Performance Lab at the University of Georgia, what risk is and how to manage it.
Episode Highlights:
- Dr. John Grable shares his background story and talks about his work at the Financial Planning Performance Lab at the University of Georgia. (3:00)
- Dr. John Grable explains that one thing he wishes he had known in the beginning of his career is that everyone’s financial journey is different and distinct. (5:16)
- Dr. John Grable shares that as an investor, there are multiple ways to think of risk. (8:36)
- Dr. John Grable explains that the threshold of your maximum level of loss that you are comfortable with is your risk tolerance. (13:26)
- Dr. John Grable discusses the traits of clients and business owners that are comparable to stocks and bonds. (20:46)
- Dr. John Grable shares that clients sometimes aren’t able to admit they are confused when asked complex financial questions. (25:08)
- Dr. John Grable explains that adding value and performance to a client’s portfolio is a unique aspect of financial planning. (30:36)
- Dr. John Grable explains that clients that are dealing with fear and greed are good clients to lose. (36:25)
- Dr. John Grable discusses how clients that gain more experience, knowledge, and financial literacy increase their risk tolerance. (40:14)
Key Quotes:
- “If you classify people as stocks or bonds, I’m very much a bond, I have a set dividend or set interest payment that I receive every month from the state of Georgia. It’s very steady, guaranteed, rock solid.” – Dr. John Grable, Ph.D., CFP®,
- “Sometimes, if the questions are too complex or require a lot of probability work, the client will overestimate or tell you they’re willing to take much more risk than they are.” – Dr. John Grable, Ph.D., CFP®,
- “If you were alive in 2008 or 2009, you lived through possibly the worst market you will ever see in your life. ” – Dr. John Grable, Ph.D., CFP®
