Portfolio Management for People

Portfolio risk is an insufficient measure for wealth management. The individual also has risk coming from their own life circumstances. When we look at portfolio risk, we need to do so in the context of the individual on the other side of that portfolio. Risk is dynamic and personal. The individual’s risk changes with their life’s circumstances. So the static measures of risk that work for the portfolio manager, whose objective is measured in months and is sitting in mean-variance space, need to be expanded when we recognize there are people on the other side of the portfolio.