Many advisors use risk tolerance to determine how to allocate client assets, putting clients in buckets of conservative, moderate or aggressive based on the question “How scared are you?” This approach can result in poor risk management, significant misallocation of resources and a high degree of anxiety. A better approach is to use a needs-based planning process to match resources to client goals.

Focus on low-cost equity mutual funds has increased dramatically in the past decade. While cost matters, mutual funds, much like other goods and services, should be evaluated based on what investors get for the price they pay. Indeed, few people start shopping for a car by asking, “What’s the cheapest car I can get?”

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When the equity market sets a new all-time high, many people become anxious about what will happen next. It turns out that new market peaks are common, occurring 1,144 times from January 3, 1928 through May 31, 2017, or once a month on average.