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Know Your Clients

07:30AM Feb 22, 2009 in category Tip of the Day by AdvisorMax

When I assesses whether a client should delve into alternative investing, I take into consideration both their capacity and their appetite for risk. --Mark Green

When I assesses whether a client should delve into alternative investing, I take into consideration both their capacity and their appetite for risk. A capacity for risk revolves around the client’s financial situation. I look at the size of the portfolio, how long the client’s time-line is, when they might need the money, and other potential constraints. If somebody has a relatively short investment horizon, they have no business being in a private equity investment, because these things can stretch out for a long, long time. Someone’s appetite for risk has more to do with the strength of their nerves. Alternative investments work for those who understand and embrace the risk. I ask if they are comfortable with losing or gaining a certain amount of their portfolio, and how comfortable are they with volatility. Do they want to sleep well, eat well or both.

-Mark Green, in
In My Experience: Mark Green

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