Analyse an asset allocation against a client's economic balance sheet and judge whether it fits

Judge the financial portfolio as one part of total wealth. Estimate the size and risk character of human capital, pension rights and property, then ask whether the financial allocation offsets or compounds those exposures. A young employee of a bank who holds bank shares and has income sensitive to the same sector is doubly exposed; the financial allocation should move away from that sector and toward assets with low correlation to their earnings. As clients age, human capital shrinks and financial capital grows, so the financial allocation usually needs to become less aggressive unless pension income provides a large bond-like asset. The trap is approving an allocation that looks diversified on its own but concentrates total wealth.