If your advisor has ever asked you, what's your risk tolerance?

I would view that as a pink flag, not a red flag, but a pink flag. And let me explain why. Here's a story to illustrate this. So I was once speaking to a couple, and this was when I was an advisor in my early years, and they had said, hey, I really enjoyed today's meeting, but you honestly forgot to ask us something. And I said, I'm sorry, what was it? They said, you didn't ask us our risk tolerance.

I said, oh, there's a reason for that. They said, well, that makes me uncomfortable, because that's a common question. I feel like you should be asking me. And I said, I appreciate the transparency. I would like to ask it now. And they go, okay, and I said, what's your risk tolerance? And they said, well, I'm like an eight out of ten.

I went, okay, spouse, what about you? They go, I'm a two out of ten and I said, what's your risk tolerance? And they said, well, I'm like an eight out of

ten. I went, okay, spouse, what about you? They go, I'm a two out of ten. I said, okay, guys, what if markets change drastically? What's your risk tolerance now, primary spouse? Obviously, not saying their name. They said, well, if markets go down, then I'm about like a four. And then I said, okay, what about you, spouse? If markets are down 40%, what's your risk tolerance? And they're like, I'm a negative

1,000. I don't want markets to ever go down. I said, you see why I don't think that's the most

effective question? Your risk tolerance is going to change based off how markets are doing. It's not an

effective gauge. I want to make sure you have enough money to never run out, and I want to make sure that you don't die with too much money.

And the way we do that is by having a conversation about how much income do you need in retirement.

So I prefer asking questions around how much money would make you uncomfortable in terms of you're going to lose sleep.

If your portfolio went from a million to

$800,000, how would that make you feel? And certain people like yourself perhaps would say,

well, that would really bother me because I no longer have income from when I was working and

I feel like I don't have time to make up those gains. And I don't want to underspend in the years

I really want to enjoy my retirement, which would be a great response. Maybe another spouse would say, well, you know, I don't want to underspend in the years I really want to enjoy my retirement, which would be a great response.

Maybe another spouse would say, well, you know, I don't love that idea, but if we're going to live the next 30 years and you're telling me our best chance to die with $10 million is to take on as much volatility as humanly possible, well, then I would want to consider that.

I'd say, great.

Well, let's have a deeper conversation as a couple to make sure that we're making sure both of you are sleeping at night. Because if you're not sleeping at night, it defeats the whole purpose of a plan. You have to have a plan you agree with. But there's something I prefer rather than risk tolerance, and that's making sure you don't have a cookie cutter allocation. Now I've

shared this in the past but one of the coolest gifts I ever received is an anti-cookie

cutter jar, literally a jar that someone gave me just to illustrate how they used to think

about risk tolerance and how they think about how do I make sure my portfolio is not cookie

cutter. So I'm going to give you a framework in today's episode that's hopefully going to help you think about making sure you don't have a cookie cutter portfolio. And this is something really easy that I've seen other firms do where they'll say, yeah, okay, what's your age? What's your risk tolerance on a scale of one to 10? Okay, you're a four, you're a three. Okay, yeah, yeah, yeah, yeah, here's your portfolio, have a good day. You're like, hey, do you even know me?

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