hard · Certified Financial Planner Risk Management
A client with a high risk tolerance and a long-term time horizon has no emergency reserve and no disability insurance but wants to invest $50,000 in a concentrated technology stock position. Applying planning guideline
What should the planner recommend first?
- Investing the $50,000 into a diversified index fund rather than a concentrated position to manage risk.
- Conducting a Monte Carlo simulation to show the impact of the concentrated position on retirement.
- Executing the trade as requested by the client to fulfill the duty to follow instructions.
- Establishing an emergency fund and securing disability coverage before any new investment allocation.
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