CNBC: Once you know that, what comes next?
Cowles: I ask how long until you need this money, how much are you going to need, and how are you going to feel when you get there. Tell me how you'd feel if you actually achieved that goal. Once you figure out that goal, my job is to help the client first combat the silent thief, inflation, which averages about 3 percent a year. And there's a fee involved for [managing the portfolio], so overall we need to generate at least 3 percent to 4 percent every year, on average. So then the risk is on top of that. We might need to generate up to 8 percent or 9 percent, on average, to meet their goal. People can relate to that because you have an endgame dollar amount, and then the rate of return they will need to get there.
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CNBC: What events in a person's life can contribute to a changing risk tolerance?
Cowles: A lot of times it's based on current cash flow and expenses. It could be a job loss or be medical-related from an accident or from illness. It could be a family member who needs something. It could be that your parent had a stroke and is now an invalid and you are the only one able to take care of the parent. Also, your risk tolerance goes down the closer you get to needing the money.