Financial Opportunity Profile Room

Now it’s time to head upstairs to the Financial Opportunity Profile Room.

This is where your builder helps you figure out how much risk you’re willing to take and what aspects of your personality ought to influence Your Financial House, as well as delve further into your values.

This happens by using various assessment instruments, which help you and your adviser know how best to communicate with each other and assists your adviser in working for and with you. This room is important, because it helps the builder know what kinds of investments will be the right building materials for Your Financial House.

If, for example, your builder can see that you’ll need an 8 percent rate of return to construct the kind of house you’ve described, then he or she needs to select investments that are likely to perform at that rate. But if the risk associated with the investments is out of bounds given what you’ve learned about yourself during the risk assessment, then there needs to be further contemplation, either about the kind of investments to be used or about the kind of house you’ll build.

On the other hand, your builder could determine that you can stand a pretty high degree of risk but that you don’t need to go out on a limb to build Your Financial House exactly as you’ve described. Being able to take the heat isn’t on its own a good enough reason to hang out in the kitchen.

You might notice that this room is right above the Room of Dreams. That’s by design. Each of the upstairs rooms relates to the one below it so you can instantly see how each is correlated and affects the other.