Your Investment and Planning Goals and Objectives
Your Ranking: 1 - 11(1 = Most important)
1) Accumulating wealth for the future
2) Charitable giving
3) Children/Grandchildren's education
4) Controlling expenses or debt
5) Emergency cash reserves
6) Major purchases
7) Preserving wealth for heirs
8) Protection from death or disability
9) Reducing income taxes
10) Retirement/Financial Independence
Describe the best, and worst, financial investment you've ever made:
Client A Best:
Client A Worst:
Client B Best:
Client B Worst:
List any investment-related personal preferences and/or constraints that we should take into consideration:
Example: Don't sell any XYZ stock; don't buy any emerging market funds, keep $5,000 in cash.
We'd like to know what you think investment risk is so we'll be talking about the same thing in our discussions. Please write a short sentence describing what you think investment risk is:
Example: Investment risk to me means the risk of losing any money that I invested.
What information (TV, magazines, other people, etc.) have you used in the past to make investment decisions?
Please list all expected cash withdrawals from your investments that you will have with us, and their time frames:
Example: $10,000 next year to buy a boat. $3,000 a month when I retire in two years.
How much input do you want to make regarding managing your investments:
Describe any lawsuits you've had regarding other money managers and/or financial advisors:
(1) Using the definition of risk you wrote above, indicate the general level of investment risk you are willing to accept. (Note: Risk and return are linked, meaning that one generally cannot get a high rate of investment return without assuming a high level of investment risk.)
(2) What is the rate of return goal for your total combined investment portfolio? (Note: Having 100% of your assets in a large basket of large stocks (S&P500) has had an average return of about 11% over the last 75 years. Having 100% of your assets in a large basket of small stocks has had an average return of about 13% over the last 75 years. Having more than 70% of your assets invested in stocks is considered to be taking very high risk.)
(3) Which of the following best describes your investment objectives & temperament? (Check only one box.)
(4) The chart above shows the one-year profit/loss on a $10,000 investment from four different portfolios. Assume you have an equal chance of getting any random positive or negative return within each portfolio's range (do not assume you'll get the average of the minimum and maximum return). Which one portfolio would you choose?
(5) How do you feel about inflation and its impact on your investments? (Note: The U.S. annual inflation rate has averaged about 3.25% since 1926, but has also been over 10% several years in that period.)
(6) How do you feel about short-term (one year or less) fluctuations in the value of your portfolio? (Note: a ±5% fluctuation over one year in a $10,000 investment would mean its value would fluctuate between $9,500 and $10,500 over the year.)
(7) Given the fact that it's normal for the value of investment portfolios to fluctuate year to year, what would you consider to be the maximum acceptable loss to your portfolio over a one-year time frame?
(8) How do you see your overall personal and business situation changing in the next few years regarding your family's employment, cash flow, health, legal, taxes, and potential for unforeseen financial expenditures?
(9) About what percent of your retirement income (all retirement income, including Social Security and all employer pensions, etc.) do you anticipate coming from your investment portfolio with us?
(10) How long do you plan to have your money invested before you begin to make withdrawals from it?
(11) Once you start withdrawing money, over how much time do you anticipate withdrawing it?
(12) If you plan on taking any lump-sum withdrawals from your portfolio in the next year, approximately how much would it be? (Note: This is in addition to any regular monthly income distributions.)
(13) Assume that all of your U.S. stock holdings are invested in one U.S. stock mutual fund (we know this is unrealistic, but please humor us and assume!). The stock market (and your fund) has experienced a near crash, losing 25% of its value in one month. What action would you take assuming this happened last month?
(14) Again, assume that all of your U.S. stock holdings are invested in one U.S. stock mutual fund. The stock market has been gradually declining at an average of 2% per month. This slow decline is also reflected in your stock mutual fund. Your investment has lost 24% of its value from a year ago. You would want to:
(15) Which one of the following investment choices have you utilized most in the past and feel most comfortable with investing in the future?
(16) How much experience do you have with investing your own funds?
(17) What is your estimate of the average annual rate of return for the U.S. stock market over the next 10 years?
(18) How many children (or other people) currently depend on you for financial support?
(19) What's your outlook for U.S. business conditions, economic growth, employment, inflation, and the overall economy over the next few years?
(20) Imagine you owned what you thought was a conservative investment portfolio. Over the last year, it lost 5% of its value. Over the same period, the stock market as a whole lost 10%.
(21) Imagine your growth and income investment portfolio (invested 60% in stocks) increased 15% over the last year, while the stock market as a whole went up 25% over the same period.
(22) You've just received a windfall equal to one-half of your current investment portfolio. How would you invest these proceeds?
(23) Compared to others, how do you see your investment risk tolerance?
(24) How well do you adapt when things go wrong financially?
(25) Have you ever invested a large sum of money just for the fun of it?
(26) When making large financial decision, more concerned with gains or losses?
(27) Have you ever borrowed money to invest, including mortgages?
(28) Which strategy suits you best?
(29) Are you easily influenced by others when it comes to making decisions about your well-being?
(30) Which of the following would make you the most upset?
Risk Category Calculator*
*We can do this part for you if you wish.
Your answers will select the risk tolerance category that best fits your goals and objectives.
Step 1: Circle the answer (and weight) that you gave for each question.
Step 2: Multiply the Answer Weight found in Step 1 by the Question Weight, and put the product in the Total Question & Answer Score column. Example: If you answered C to question #1, the total would be 12.
Step 3: Add all the numbers in the Total Question & Answer Score column and enter the total in the bottom row.
Step 4: Your Grand Total Score then selects your risk category as shown at the bottom of this page.
If your Grand Total Score is between 76 to 120, your risk category is considered to be Conservative.
If your Grand Total Score is between 121 to 170, your risk category is considered to be Moderately Conservative.
If your Grand Total Score is between 171 to 220, your risk category is considered to be Moderate.
If your Grand Total Score is between 221 to 265, your risk category is considered to be Moderately Aggressive.
If your Grand Total Score is between 266 to 304, your risk category is considered to be Aggressive.
Creating Your Personal Goals and Expectations
Please prepare a prioritized list of (investment related) services or benefits you expect to receive as a result of your relationship with us. Your list will help keep us focused on the services you believe are the most important. Your personal list will be reviewed at future meetings. We will suggest additions to your list if we believe specific services or benefits would be of value to you. Your list may expand and contract with time as your needs change and as projects are completed.
A sample list might look like this:
1) We need quality investment advice because we don't have time to do it ourselves.
2) We want to get a good return on our investments, but we don't want to worry about them.
3) We want to give $25,000 to the local college when we pass away.
4) We would like to have financial statements and reports that we can easily understand.
1) Our accountant needs timely information for our tax returns.
2) We want to have more free time now to help our church and community.
3) We are worried about paying too much in federal estate taxes.
4) Buy an RV next year for $50,000 and travel.
Is there anything you think we should have asked you on these forms, but didn't?