401K GPS| Retirement Risk Management

Your Risk Profile

After you sign up for 401K GPS and begin to take control of the management of your 401(k) account, you will be given a nine question risk profile to complete. The goal of the risk profile is to assess two aspects of your risk makeup: your ability to take risk and your willingness to accept risk.

Ability to take risk essentially determines if your situation allows you to take risk and if you’re on track to meet your goals. Factors to consider here include time until your financial goals are needed to be met, retirement funding level, income and savings, debt levels and liquidity needs. Also consider the type of industry you are in and if your income is derived from commissions or a steady salary.

Willingness to take risk depends on your inherent nature and attitudes toward risk. This is an emotional component, and although it should be considered, try not to let it override the more concrete analysis of your financial condition.

Both are needed to provide as complete a picture of your financial situation as possible. This assessment will be the

framework for the management of your 401k account and your unique investment allocations based on your plan options.

Your score will first determine your overall risk tolerance, which ranges from conservative investors whose allocation will be overweight with fixed income funds to equity focused growth investors. Next, we overlay your approximate years to retirement to provide a more specific, nuanced recommendation for your personal situation.

Your risk tolerance is not static. You will be periodically required to update your risk profile to keep it current with ever-changing life events, such as having children, caring for elderly parents, or receiving an inheritance. As with any risk assessment, the accuracy of your responses is critical to us providing a recommendation that is appropriate for you and the ultimate management of your retirement account.