After reviewing client portfolios for years, you start to notice something: they almost all look the same.
Eight to ten holdings. A mix of U.S. and international equities. Some bonds. Maybe a slight lean toward one fund family — American Funds here, Fidelity there — depending on the advisor's preference. Run an X-ray on them and you'll find they're basically generic models, probably created by a home office somewhere and handed down like a recipe nobody thought to question.
For a lot of people, especially those with smaller accounts, this is fine. A model portfolio gets you diversified, keeps costs reasonable, and doesn't require much thought. There's nothing wrong with that when you're building your base.
But here's what I've learned: the portfolios that actually impress me — the ones that make me think the advisor was paying attention — are the ones that look a little weird at first glance. The ones where I pull up the holdings and think, "Why would they do this?" Only to sit down with the client and hear something like, "Bill, I don't care about growth. I only want protection and guarantees." And suddenly it clicks. That portfolio wasn't built from a template. It was built from a conversation.
Those are the exceptions. Most of the time, what I see is the opposite: a portfolio that looks "normal" because nobody asked any questions.
The Problem with "Good Enough"
Model portfolios exist because they're efficient. An advisor can plug your risk score into a system, the system spits out an allocation, and you're invested by the end of the meeting. It scales well. It's compliant. And for the advisory firm, it's profitable because it doesn't require much individual attention.
The problem is that your life isn't a model.
Your neighbor might have the same net worth as you, the same age, even the same risk tolerance score on one of those questionnaires — and still need a completely different portfolio. Maybe she has a pension covering 80% of her living expenses and can afford to be aggressive. Maybe you're relying entirely on your 401(k) and can't afford a 30% drawdown two years before retirement. Same numbers on paper, completely different reality.
A model doesn't know that. A conversation does.
The Sleep Test
Most advisors assess risk with a questionnaire. You answer ten or fifteen questions, you get a score — maybe "moderate conservative" — and you get ushered into that portfolio. The industry has been running this playbook since Harry Markowitz published modern portfolio theory over 75 years ago. A few things have changed since then.
I use what I call the sleep test. It's simple: what level of risk is going to keep you up at night? Because sleepless nights can't be gained back, and they shouldn't be wasted on investment performance.
This isn't just a softer version of the same questionnaire. It gets at something fundamentally different. A risk tolerance questionnaire measures how you feel about risk in theory. The sleep test measures how you live with it in practice.
Here's a distinction that matters more than most advisors realize: risk tolerance and risk capacity are not the same thing. Someone can be emotionally comfortable with volatility but financially unable to survive it. A risk score is a snapshot of an emotion. Risk capacity is the mathematical reality of your timeline. A traditional questionnaire might score someone as "aggressive" and put them in a high-equity portfolio. But if they can't afford to lose 25% of their savings three years before retirement, that score is meaningless. It's a measurement of their temperament, not their situation.
The reverse is just as common. I've worked with clients who have massive risk appetites — they'd bet it all on equities tomorrow if I let them. But their retirement is already fully funded. They've won the game. Why keep playing? At that point, taking your foot off the gas isn't timid. It's smart.
Risk tolerance is also a living, changing thing. A new job, a health scare, a marriage, a grandchild — these all change how much risk makes sense. It's not something you assess once and file away. It needs to be monitored and re-evaluated annually, because life doesn't stay the same and neither should your portfolio.
When the Phone Rings During a Correction
During market corrections, we call all of our clients. Not when they call us — before that. We pick up the phone first, because the media is already running headlines about the sky falling, and fear is contagious.
Ninety-five percent of the time, the conversation is quick reassurance. The plan hasn't changed. We anticipated pullbacks when we built the strategy. This is normal. But part of that call is always the same question: is this keeping you up at night?
A simple question with a lot of meaning.
If the answer is yes, it's time to take some chips off the table. Not because the market told us to — because the client did. And we'll look at the best way to do that together. That's not panic selling. That's listening.
A model portfolio doesn't make that phone call. A score on a risk questionnaire doesn't check in on you during a bad week. And an algorithm doesn't care whether you slept last night.
When Does "Good Enough" Stop Being Good Enough?
Not everyone needs a custom portfolio. Here's how I think about it:
From zero to $50,000, you're building your base. Low-cost growth ETFs from well-managed companies. Keep it simple, keep costs down, and let compounding do the work.
From $50,000 to $250,000, you need more strategy. This is where allocation starts to matter. How much tech exposure versus dividend-growing stocks? Do alternatives make sense? Your portfolio deserves more attention at this point.
Above $250,000, professional guidance, strategy, and sophistication should be the standard. You have enough to fully diversify across asset classes and sub-asset classes. Every investment should serve a purpose, and they should be working together. Portfolios of this size also deserve more monitoring, more research, and more scrutiny.
Personally, I meet with representatives from every ETF or investment I recommend — either in person or at minimum a call or Zoom meeting. I want to hear their process, their vision, their corporate values. These things matter when you have serious money on the table. You deserve an advisor who's done that homework, not one who picked a fund because it was on the firm's approved list.
How to Tell If Your Portfolio Is Actually Customized
If your advisor tells you your portfolio is built specifically for you, here are three ways to check:
Look for round numbers. If you're sitting at 50% stocks and 50% bonds — or 60/40, or 70/30 — that's a model. Real customization doesn't land on neat percentages, because real life isn't that clean.
Look for overlap. If you're holding multiple funds or positions that do essentially the same thing — like owning both Visa and Mastercard, or Home Depot and Lowe's — that's duplication, not diversification. It means nobody looked under the hood.
Ask this question: "If I moved my retirement date up three years, how would my portfolio change?" If the answer is simply switching from "moderate aggressive" to "moderate," that's a label change, not a strategy change. You deserve more than a slider moving one notch to the left.
The Bottom Line
There's nothing wrong with model portfolios as a starting point. They get you invested and diversified, and for smaller accounts that's exactly what you need. But as your wealth grows and your life gets more complex, "good enough" stops being good enough.
Your portfolio should reflect your life — your income needs, your fears, your timeline, your health, your goals. Not a risk score. Not a template. Not whatever allocation was popular the year your advisor set up your account.
The best portfolios are the ones that look like they were built for one person. Because they were.
If you're not sure whether your portfolio actually reflects your situation — or if it's a model wearing a custom label — it might be worth having a different kind of conversation. I wrote about how traditional allocation models broke down in Why the 60/40 Portfolio Failed You (And What to Do Instead), and if you're within five years of retirement, 5 Years from Retirement? Here's What You Should Be Doing Right Now covers the planning window you're in.
Not everyone will connect with this approach. But if it resonates, that's probably telling you something.