Risk Management

1. Identify & Mitigate Unacceptable Risks

Risk exists in every part of investing. You cannot eliminate it all. But there are two risks you must eliminate because they can destroy your retirement:

Permanent capital loss
Once your portfolio drops significantly, especially early in retirement, it may take years or longer to recover. That can derail your spending plan and leave you vulnerable.

Longevity risk
Living longer is a gift. But it creates the risk of outliving your assets if your plan assumes too short a time horizon or lacks flexibility.

Most financial advisors talk about risk management as if it is a checkbox exercise. They’ll say things like “diversify” and stop there. But diversification without thoughtful planning often fails to protect you when it matters most. A portfolio full of different asset classes isn’t risk managed. It’s just window dressing.

We do things differently:

• We clearly define what counts as unacceptable risk for your situation
• We model scenarios that test your portfolio against deep downturns and longer lives
• We prioritize strategies that help avoid catastrophic loss or emotional decision-making
• We avoid unnecessary complexity that adds noise but not value
• We focus on risk strategies that support long-term success, not just short-term comfort

Here, you will not only see what could take your plan off track. You’ll see exactly how we keep it on course without sacrificing opportunity.

2. Construct an All-Weather Portfolio

Many financial advisors believe that a portfolio diversified by investing in different asset classes such as domestic stocks, international stocks, real estate and bonds is the best way to manage risk.

We’ve lost track of how many times we’ve reviewed a prospect’s portfolio to find that he/she was invested in more than 10 different asset classes and multiple high-fee mutual funds that all invested in nearly identical securities.

Not only does this level of over-diversification lead to mediocre results, but, worse, it often fails when you need it the most, as asset values typically fall in unison during a crisis.

Why doesn’t asset class diversification help manage risk? The short answer is that most investments bear the same two fundamental risks: business cycle risk and interest rate risk, sometimes both.

Moreover, most investments are susceptible to violent price swings due to investor psychology and herd behavior. Think everyone rushing for the exit during a fire in a crowded theater.

At Fortress Capital Advisors, we recognize these shortcomings and, as a result, take a unique approach to portfolio construction and risk management:

• Rather than focus on asset allocation, we build portfolios comprised of rigorously researched, complementary investment strategies that uncover opportunities traditional portfolios often miss.
• Every investment has a specific role within the portfolio that compensates for specific risks. If it doesn’t serve a purpose, we don’t own it.
• Investments are weighted in a manner that balances risk and reward while incorporating client-specific needs like income generation.
• We incorporate tail-risk hedging strategies designed to protect against catastrophic loss, helping preserve capital during extreme market events without sacrificing long-term growth potential.
• Rather than build portfolios where nearly every investment moves in lockstep, we seek balance. In our experience, all-weather portfolios that provide stable and consistent returns do a much better job of helping clients reach their goals than those with wild year-to-year swings.

Rather than build portfolios where nearly every investment goes up or down in tandem, we seek balance. In our experience, all-weather portfolios that provide stable and consistent returns do a much better job of achieving client goals than those with returns that vary wildly from year to year.

3. Monitor & Adjust

Constantly reacting to the never-ending stream of financial data and news is a recipe for failure, yet this type of behavior is surprisingly common among amateur and professional investors, alike.

On the flip side, a simplistic strategy of setting an investment allocation and readjusting target weights periodically, is naïve and dangerous, especially for retirees living off of portfolio income.

Both approaches leave investors dangerously exposed to market shocks.

That’s why we’ve developed a research-driven approach to monitoring portfolio risk. We’ve spent thousands of hours identifying the data points and indicators that matter most, so we can ignore the noise, stay grounded in evidence, and respond thoughtfully when risks begin to build. The goal isn’t to predict the next storm, but to stay adaptive enough to avoid the worst of it without overreacting to every headline.