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What Drives Risk Tolerance

What Drives Risk Tolerance

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Few issues are more important to investors than risk. A primal fear among investors is that they will run out of money in retirement and be forced to compromise their quality of life or even become homeless. One study found that nearly half of women in the United States who make more than $30,000 a year are afraid they will end up on the streets. Even more surprising, 27% of women with salaries of more than $200,000 expressed the same fear.

Fear of being homeless is so common it even has a name. It’s called peniaphobia.

To be a successful advisor, you need to understand how risk affects the decisions investors make and what you can do to make those decisions more objective and responsible. Demonstrating value...