A risk-averse person tends to tragically act out through their own worse financial fears.
Some people may invest in really conservative investments, not allowing their portfolio to have the potential to grow or perhaps even stay on pace with inflation. Putting all of your money into only bank CDs may look good during turbulent times, but I often say, because of inflation, that this solution is the safest way to lose your money, due to inflation erosion.
Some people will only work with advisors who pander to their clients wishes without challenging or educating them on other investment options. Instead, the advisor simply fills the investment order and moves on to their next client.
Some clients may actually destroy their wealth. These individuals may pull all of their money out of the market and decide to buy gold; or they may pull money out of their retirement accounts for fear that the government might confiscate it.
Some people are simply are frozen by fear. These folks lose the employer-match to a retirement account because they don’t know what to do or they fear making that wrong decision. These are the same people who don’t sell an investment that has become worthless or have never taking the time put together a will, even though they’ve had children for two decades.
Lastly the risk-averse are often filled with stress; first because they couldn’t take action long-ago and now, because they haven’t taken any action since.
Stop being risk-averse and begin being risk-smart.