For years you and I have listened to clients tell us that they can stomach short-term market gyrations. What they don’t tell us is that violent ups and downs in the things they own drive them crazy. As you asset allocate, make sure your selections match their risk tolerances.

It is imperative that you sit with every client and ask, “What is it you expect of me.” Until I learned better, there were times when I assumed my clients had aggressive goals when they actually did not. I thought I had to achieve significant goals only to find out later that my clients simply wanted to beat CD rates.

Over the years I’ve talked to many advisors and asked them what they considered to be an aggressive rate of return. The typical answer? About 25% per year. I’ve also asked clients and other everyday people what they considered to be an aggressive rate of return. The typical answer? About 8% per year. When I ask clients why 8% seems aggressive, they tell me that it’s twice CD rates. Your clients may have different expectations than you do. There is no need to over promise and sadly enough, to over promise is to under perform.