Or it may require covering with a guaranteed income for life solution, for example.
Giving certainty that essential spending can be met allows higher returns to be targeted with remaining funds.
Understanding and evidencing capacity for loss is ultimately a sign of a good advice process.
It shows an adviser has taken the time to understand and address the client’s situation, needs and priorities. It helps to demonstrate value, too.
From the client’s point of view, capacity for loss means that even in times of financial turmoil, they have the certainty that they have the income to keep the lights on and food on the table, confident they will not have to make forced decisions in a difficult market.
Stephen Lowe is group communications director at Just Group
