If you’ve ever filled out an investment questionnaire, you’ve probably seen questions like:

• “How would you react if your portfolio dropped 20%?”
• “Are you conservative, moderate, or aggressive?”

Those questions are often unanswered without much discussion.

But here’s the reality:
Your risk tolerance is a key part of your financial plan—and it’s often misunderstood.

Risk Tolerance Isn’t About What Sounds Good—It’s About What You Can Stick With
In my experience, almost everyone thinks they’re comfortable with risk… until the market actually tests them.

Being ‘aggressive’ can feel comfortable when markets are climbing.
It’s a lot harder to feel that way when your account is down 15–20%.

That’s why risk tolerance isn’t just about your willingness to take risk—it’s about your ability to stay invested when things get uncomfortable.

Because the biggest risk to your financial plan usually isn’t the market…
It’s making a bad decision at the wrong time.

The Problem with “Moderate” and “Aggressive”
One of the biggest issues in financial planning is how vague risk conversations can be.

What does “moderate” actually mean?

To you, it might mean a small fluctuation.
To someone else, it might mean a 25% swing.

That disconnect can lead to portfolios that don’t actually match how someone feels—and that’s where problems start.

Why We Use a Different Approach
At our firm, we use a program called Nitrogen to help our clients better understand and quantify their comfort with risk.

Instead of vague labels, it assigns you a Risk Number® on a scale from 1 to 99, giving us a clear, objective way to measure your comfort with risk.

Here’s why that matters:
• It turns an emotional conversation into something measurable
• It helps align your portfolio with your actual comfort level
• It gives us a shared language to talk about risk clearly

Even more importantly, it allows us to show you a realistic range of outcomes—so you’re not surprised when markets move.

Risk Tolerance vs. Risk Capacity (Yes, There’s a Difference)
An important point to consider:
• Risk tolerance = how you feel about market ups and downs
• Risk capacity = how much risk you can afford to take based on your goals, timeline, and financial situation

A good financial plan balances both.

You might feel comfortable taking a lot of risk—but if you need that money in three years, that’s a problem.
Or, you might have the ability to take more risk—but feel uneasy doing it.

Both matter.

Why This Matters More Than You Think
When your portfolio matches your risk tolerance:
• You’re less likely to panic during downturns
• You’re more likely to stay invested
• Your plan has a better chance of actually working

When it doesn’t?

That’s when we see emotional decisions—selling at the bottom, sitting in cash too long, or constantly second-guessing the strategy.

Final Thought
Financial planning isn’t about taking the maximum amount of risk- it’s about aligning your risk with your goals and comfort level.

Because the most suitable financial plan isn’t the one that looks perfect on paper—
it’s the one you can stick with through real life.

Philip Lockwood | Founder + Managing Partner
Address | 1501 Ingersoll Ave. Suite 201 Des Moines, IA 50309
Phone | 515-274-8006
Email | Plockwood@parklandrep.com
Website | Lockwood Financial Strategies

Securities offered through Parkland Securities, LLC, member FINRA (FINRA.org) and SIPC (SIPC.org). Investment Advisory services offered through SPC, a Registered Investment Advisor. Lockwood Financial Strategies, LLC is independent of Parkland Securities, LLC and SPC