• Terry Herr, CFP®, CLU

A Mountain of Risk?

I would not describe myself as a risk taker. However, some may disagree with me. I ride a motorcycle, I backpack into the “backcountry” (often where cell phones don’t work) and as you read this I will be on my way to Mount Everest. How then, can I say I am not a risk taker?

Understanding Probabilities

From 1921 to 2006, the mortality rate for Everest climbers was 1.3%.* To put it into context, traffic accidents are the 9th leading cause of death and account for 2.2% of all deaths globally.** Statistically, driving a car is more likely to result in a bad outcome than going to Mount Everest.

As I prepared for my climb, I spent considerable time researching everything from the environment, food and equipment to High Altitude Pulmonary Edema (HAPE), mountain rescues and deaths. Last summer I also spent some time with the Colorado Mountain School to learn and hone the necessary alpine skills to increase my probability of a successful summit. All of the skills taught were rooted in safety. A climber cannot successfully summit mountains without identifying and adequately protecting themselves from the dangers around them. Every climber wants to avoid (or at least limit) the likelihood of a catastrophe. Many climbers have forged the path and “been there, done that” which has allowed me and other Alpinists to learn from their experience.

Financial planning, wealth management and investing is entirely about understanding the probabilities as well as being aware of and addressing the risks. If you do not take the time to plan and either acquire or hire knowledge, your probabilities of success in financial matters will be low. Sometimes people get lucky, or eke out a meager retirement existence. However, not planning assuredly results avoidable discomfort and a potential financial catastrophe for many.

Let’s take a look at some statistics:*

  • According to the Government Accountability Office (GAO) about 50% of household do not have any retirement accounts at all.

  • Of those that have retirement savings, the median balance is only $59,000!

  • Americans have an approximate $4.3 Trillion in debt.

  • A depressing 50% of American households have no savings and parental role modelling is the single biggest influence on youth financial habits, creating a virtuous cycle of insecurity*****

  • According to the Census Bureau Americans age 55-64 have an average net worth of $45,447

  • The average social security income check is $1,354 per month ($16,248/year).

  • Employees are missing out on $24 Billion in employer matches by not participating or under-participating in their employer plans****

  • 40% of adults gave themselves a C, D or F on their knowledge of personal finance and almost 80% believe they could benefit from financial advice regarding everyday decisions*****

  • 60% of adults admit to having no budget*****

  • Over one-third of Americans pay only the minimum credit card balance*****

I find these statistics scary. The outcome, financial instability of Americans is foreseeable and avoidable. All to often Americans say, “I’ll do it tomorrow.” and tomorrow never comes.

Immediate Risks

On the mountain, risks are clear and the outcome of decisions climbers make are immediate. As a climber I have complete control over the decisions. If a climber decides to turn around, it is still a great-day in which they experience something most never have the opportunity to experience. ...and the views are spectacular!

Unfortunately the the outcomes of financial decisions are rarely immediate and they are not always clear. Delaying a decision has an immediate impact, you just don't see that impact until pending doom gets closer. It is challenging to see the view of your financial success (or failure) when they are so far off in the distance. Defining your goals today can help paint the picture. More importantly you'll be able to develop a map so you can see how you'll get there. Taking tangible steps towards your goals will keep the picture in sight. The view will help motivate you to keep climbing towards your goal.

At the core of understanding uncertainty (risk), time frames and probabilities. A disciplined long-term strategy works in the long run. Until you have a strategy that lays out your financial road map, the risk just keep growing and remain unseen until it's too late.

When it comes to financial planning and investments, do you understand probability of success? Most Americans don’t. Not knowing the probability of success, is like not climbing with a crampon, you’re liable to slip off the mountain.


I am using my climb in an effort to raise awareness and funds for Foster Children. Please consider a tax deductible contribution to Children's Home and Aid Society of Illinois by DONATING HERE. You can also follow my climb the CairnforKids Facebook page or on Instagram.

*Sources: Science Daily, Association for Safe International Roads, Smart Asset, CNBC May 12, 2015, Huffington Post 6/3/2017

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.


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