May 03, 2022

How Much Stock Market Risk Is Just Right? With Dr. John Grable

44 minutes

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®

Resources Mentioned:

Dr. John Grable LinkedIn

University of Georgia

Financial Planning Performance Lab

Erik Garcia, CFP®

Xavier Angel, CFP®, ChFC, CLTC

Plan Wisely Wealth Advisors

...more

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By Erik Garcia, CFP®, Xavier Angel

88 ratings