Wealth management and advisory refer to helping clients make investment decisions and multiply their accumulated capital. Wealth management processes aim to assist the customer in attaining specific financial goals, such as mitigating financial risks and building wealth.

In wealth management, risk can be described as any factor that deviates from the expected financial result. So, risk management strategies are strategies that wealth managers and advisors use to identify and analyze risks that might emanate from investments.

Asset allocation is one of the most widely adopted risk management strategies. It involves splitting investments into different asset classes. For instance, individuals might be advised to divide their investments into shares, bonds, real estate, and stocks.

Furthermore, it is important to analyze the client’s risk tolerance to mitigate risk. A risk tolerance assessment can determine your client’s ability to take on risk and help them balance risk and reward.

Wealth managers also help their clients manage risk through portfolio rebalancing. Portfolio rebalancing seeks to align the client with their investment goals and objectives. It involves evaluating the performance of a particular investment portfolio and taking necessary measures to optimize returns while reducing potential risks.