The Two Trails Risk Compass™ measures several distinct inputs. Risk tolerance is your emotional and behavioral relationship with volatility — anchored in what you actually did and felt during real market events, weighted more heavily than hypothetical predictions (60/40 when behavioral data is available). Time horizon is how long your money has to work before you need it. These are presented side by side, not blended into a single number, because they serve different purposes in building your plan.
Because people often feel differently about risk depending on the type of account, we measure tolerance for retirement and non-retirement accounts separately — each with its own score based on your direct input for that account type, blended with your overall behavioral and emotional profile.
The compass also measures loss aversion asymmetry — how differently you experience gains versus losses — and regret orientation — whether your financial regrets tend to be about actions taken or opportunities missed. These behavioral dimensions help your advisor understand not just how much risk you can handle, but how you are likely to respond when things go well and when they don't.
Your risk profile is determined separately for each account type based on its tolerance score. The six profiles — Preservation, Conservative, Stability, Growth, Aggressive, and Opportunity — describe your natural inclination toward risk, not a prescription for your portfolio. None is better or worse than another, and it is common for people to have different profiles for different types of accounts.
An important distinction: this compass measures risk tolerance — how you experience and respond to volatility — but not risk capacity, which is your financial ability to absorb losses without jeopardizing your goals. Tolerance and capacity don't always align. Someone may be emotionally comfortable with aggressive investing but lack the financial cushion to recover from a major loss, or vice versa. Your advisor will consider both dimensions, along with your liquidity needs, income stability, and overall financial picture, when building your plan.
This compass is a starting point for conversation, not a conclusion. It is designed to be revisited — at plan reviews, after volatile market periods, or when your life circumstances change.
Your responses were generally consistent across the board — no particular tensions or surprises stood out. Your planning meeting will focus on translating these results into a concrete investment strategy.