Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

1st Quarter | 2024

Quarterly recap



Current market environment performance of dynamic, risk-managed investment solutions.

by Jerry Wagner

Where I live, it is a summer ritual to load up the SUV or minivan with your children and their friends and spend the better part of a day at one of our local amusement parks.

The allure of amusement parks seems universal. I think they are so popular because they have something for everyone, no matter what their age—even if it’s just a walk around the park’s attractions.

But not everyone can cope with all of the rides. For some, the merry-go-round is all they can stomach, while others line up over and over again for the latest, greatest roller coaster.

In investing, most people think they know what will satisfy them; it boils down to an investment with high returns and no risk. Of course, such an investment does not exist.

Not all investors are alike

As investors become more aware of the true opportunities open to them, they learn that risk and return are tied together. Less risk usually means lower return.

Some investors do not have the same appetite for either returns or risk. One investor may have no problem stomaching declines of 50% or more, some max out at 20%, and others are still nauseated by a decline of 10% or less.

As a result, most investment firms offer core, suitability-based strategies. Typically, these strategies come in three to five risk profiles with labels such as Conservative, Moderate, Balanced, Growth, and Aggressive.

The advantage of these suitability portfolios, like the variety of rides offered at the parks, is that they seek to match the person’s appetite for risk. Each tries to deliver the highest returns for the perceived level of risk being taken.

While this means that the risk of the ride is matched to the rider’s ability to withstand the risk, in the investment world, like at the amusement park, the level of returns will vary. Normally, the lower the risk, the lower the return. The rider on the merry-go-round generates fewer screams of joy than the rider on the roller coaster; on the carousel ride, the number of heart-stopping plunges is near nonexistent, while the coaster fanatic will experience many.

Things can change over time

It’s important to remember that investment suitability changes over time. Just as someone may have loved the roller coaster in their teens, the ability to take its twists and turns, climbs, and plunges may have changed when they reach their senior years.

At Flexible Plan Investments, our suitability questionnaire is the vehicle for determining an investor’s level of risk suitability. If an investor believes there is a performance problem with their investments, if their life circumstances have recently changed, or if it’s just been a while since they last assessed their investment risk tolerance, it is usually a good idea for them to retake the questionnaire to see if their true appetite for risk has changed while the investment portfolio has not.

And, of course, the realization that a Moderate portfolio with limited risk will not perform the same as an Aggressive portfolio helps a lot in balancing return expectations with the risks that are truly acceptable to an investor. Failure to do this is like putting an aggressive thrill-seeker on a merry-go-round or a conservative rider on a roller coaster—nobody will be happy. The former will be bored, and the latter will spend the rest of the day throwing up.


Just like an amusement park and its variety of rides, there are actively managed strategies suitable for everyone. If you are more afraid of heights than others, consider ratcheting down your suitability profile until the ground below does not seem so far away.

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