Quantitative Fiduciary Framework

Portfolio Risk Analysis & Profiling

Risk is not a single number—it is the probability of failing to meet your financial goals. We calibrate volatility, downside buffers, and liquidity to your personal timeline.

Home

The Plum Creek Risk Architecture

A disciplined mathematical approach designed to preserve capital in downturns and capture upside compounding.

Metric 1

Value at Risk (VaR)

Calculates the maximum expected statistical loss over a specific confidence interval (95% or 99%) across monthly and annual periods.

Metric 2

Maximum Drawdown

Measures the historical peak-to-trough decline before recovery, ensuring client emotional endurance matches portfolio construction.

Metric 3

Standard Deviation

Measures the dispersion of portfolio returns relative to historical means to quantify day-to-day and month-to-month portfolio volatility.

Metric 4

Sortino & Sharpe

Ratios evaluating risk-adjusted return, penalizing strictly harmful downside volatility rather than harmless upside volatility.

Model Portfolio Risk Tiers

How our quantitative models scale risk and return profiles across market cycles.

Preservation

Conservative Wealth

Score 1 – 25

Equities / Fixed:20% / 70%

Cash / Buffer:10%

Target Volatility:4.8%

Worst 1-Yr Drawdown:-5.2%

Balanced

Wealth & Income

Score 26 – 50

Equities / Fixed:45% / 45%

Real Assets:10%

Target Volatility:8.4%

Worst 1-Yr Drawdown:-14.8%

Growth

Disciplined Growth

Score 51 – 75

Equities / Fixed:70% / 25%

Real Assets:5%

Target Volatility:12.8%

Worst 1-Yr Drawdown:-24.2%

Appreciation

Dynamic Capital

Score 76 – 100

Equities / Fixed:90% / 5%

Alternatives:5%

Target Volatility:16.5%

Worst 1-Yr Drawdown:-35.5%

Interactive Assessment

Determine Your Custom Fiduciary Risk Score

Answer 5 brief questions regarding your timeline, financial cushion, and volatility tolerance to calculate your personal risk score and target asset allocation.

Question 1 of 5 Confidential & Free

1. What is your investment time horizon for this capital?

When do you anticipate withdrawing a significant portion (>20%) of these funds?

Under 3 years (Short-term) Capital preservation is critical; very limited time to recover from a market downturn.

3 to 7 years (Intermediate horizon) Looking for balanced growth while maintaining reasonable liquidity and defensive cushions.

7 to 15 years (Long-term accumulation) Ample runway to ride through typical multi-year market cycles and capture equity growth.

15+ years or Multi-generational Focused strictly on maximum long-term purchasing power and compounding across decades.

2. What is your primary investment objective?

Every portfolio represents a trade-off between purchasing power defense and volatile compound growth.

Capital Preservation First Protecting my current dollar balance is far more important than achieving market-beating returns.

Balanced Growth with Reliable Income Moderate equity participation combined with cash-flow producing fixed income.

Capital Appreciation Outpacing Inflation Growing my net worth substantially while accepting moderate periodic fluctuations.

Maximal Long-Term Wealth Accumulation Willing to endure sharp short-term volatility for highest compounding potential.

3. How would you react if your portfolio lost 20% over a 3-month market plunge?

Emotional endurance under market stress is the single greatest predictor of investment success.

I would sell all investments and move to cash I cannot stomach paper losses; sleepless nights would force me out of the market.

I would be very anxious and want to reallocate to safer assets I would contact my advisor to reduce risk exposure and prevent further drops.

I would hold steady and stick to the disciplined plan I understand drawdowns are a normal part of market cycles and expect eventual recovery.

I would aggressively buy more shares at discount valuations I view market sell-offs as generational buying opportunities for quality assets.

4. What is your financial liquidity cushion outside of this portfolio?

Your mathematical capacity to absorb risk depends heavily on dedicated cash emergency reserves.

Minimal (Under 3 months of expenses) I may need to tap this investment portfolio if an unexpected personal emergency arises.

Adequate (3 to 6 months in liquid savings) Standard emergency fund in place, but major emergencies might affect investment timeline.

Substantial (6 to 12 months in cash + steady reliable income) Very low probability of needing to liquidate investments during market downturns.

Extensive (12+ months in reserve + diversified cash flow) This portfolio is completely decoupled from day-to-day living expenses and needs.

5. Which scenario would you prefer for a $100,000 investment over a 1-year period?

Select the range of best-case and worst-case outcomes you feel most comfortable experiencing.

Best: +$5,000 | Worst: -$1,000 (Conservative) Minimal upside, but virtually zero risk of meaningful capital impairment.

Best: +$12,000 | Worst: -$6,000 (Moderate) Balanced upside with a controlled downside boundary.

Best: +$22,000 | Worst: -$15,000 (Growth) Significant upside potential while tolerating double-digit interim pullbacks.

Best: +$35,000 | Worst: -$28,000 (Aggressive) Maximum equity leverage for long-term compounders willing to swallow sharp paper losses.

Calculated Result

Balanced Wealth & Income

Seeks moderate capital growth while dampening downside equity volatility through high-quality institutional fixed income.

48 Tier 2

Target Asset Allocation

Equities (US & Int'l) 45%

Fixed Income (Bonds & Treasuries) 45%

Real Assets & Infrastructure 5%

Cash Equivalents / Reserves 5%

Expected Annual Return:6.0% – 7.2%

Historical Volatility (Std Dev):8.4%

Worst Historical 1-Yr Decline:-14.8%

Historical Crisis Stress Testing

Here is how this model held up during actual major market shocks compared to an unhedged 100% S&P 500 equity portfolio:

Market Crisis	S&P 500	Your Model
2008 Financial Crisis	-37.0%	-19.4%
2020 COVID Crash	-19.6%	-11.2%
2022 Inflation / Rate Spike	-18.1%	-13.5%

Request Fiduciary Review With This Score

The Three Dimensions of Portfolio Risk

Why traditional questionnaires fail, and how our fiduciary advisory bridge the gap.

🧠

1. Risk Tolerance (Psychological)

Your emotional willingness to endure portfolio fluctuations. Many investors believe they are aggressive until a sudden correction triggers panic selling at market bottoms.

📊

2. Risk Capacity (Mathematical)

Your actual financial ability to withstand a loss without altering your lifestyle, delaying retirement, or running out of capital. Dictated by time horizon, cash reserves, and income stability.

🎯

3. Risk Required (Goal-Driven)

The rate of return mathematically necessary to achieve your family's lifetime goals. Taking too little risk exposes you to inflation risk, while taking too much causes avoidable stress.