Question: “What is the likelihood that you will need to withdraw a significant amount of funds from your investment prior to the end of the time horizon selected above?”
Asset mix should also be adjusted to reflect any circumstances that might result in the client having to liquidate investments sooner than the planning objective’s timeframe. For example:
Low liquidity; low net worth; high current debt;
high debt service; loss of family income or unexpected financial demands.
Personal issues such as marital difficulties; abnormal family demands; unemployment, replacement of expensive assets; uncontrolled spending; health problems.
If you detect a reasonable probability of any of these, reduce Equity Investments that are based on stocks and securities. by 5 to 10%, as shown here.
|
Likely to Withdraw Prior to Planned Time Horizon |
Adjustment to Basic Asset Mix |
|
|
Income |
Equity | |
|
Not Likely |
no change |
no change |
|
Slight Chance |
+5% |
-5% |
|
Very Likely |
+10% |
-10% |