Beyond Beta: Understanding Risk Through a Planner’s Lens
Ask ten people to define “risk” in investing, and you’ll get eleven answers, none wrong, all incomplete. To an investment manager, risk lives in spreadsheets: volatility, beta, drawdowns. To a client, risk feels personal: not retiring when planned, losing sleep when markets tumble, wondering if the plan will still work.
At Westmount Wealth, we see both sides, the math and the meaning, and our job is to translate one into the other.
Picture two people looking out at the same ocean. Up on the bridge, the ship’s captain studies radar, wind speeds, and tide charts. “Waves at two metres,” she says calmly. “Nothing we can’t handle.”
Down on the passenger deck, someone grabs the handrail as the floor lurches. “Two metres?” they think. “Feels like twenty!”
That’s risk. The same storm, viewed through two very different lenses.
Investment managers and clients sail the same markets, but they measure risk differently. One speaks in probabilities; the other feels it in their stomach.
The Numbers Version of Risk
For managers, risk isn’t emotional - it’s empirical. The job is to understand uncertainty well enough to control it.
Volatility is the market’s heart rate, how fast and how hard prices beat up and down. A calm pulse means smooth sailing; a racing one means turbulence ahead.
Managers use it as their compass: the higher the volatility, the choppier the ride. But here’s the twist, volatility doesn’t care whether the movement is up or down. Even a surge in prices shows up as “risk.” It’s like calling both tailwinds and headwinds equally dangerous because they move the plane.
If volatility tracks the bumps, drawdown measures the falls. How deep did the market plunge before it started climbing back up again. Portfolio Managers watch this closely because recovery time matters. Fall 30%, you need a 43% gain to get back to even. Fall 50%, you need 100%. The deeper the crater, the harder the climb. Managing drawdown is like flying a plane low enough to stay below the storm clouds, you might not move as fast, but you land smoother.
Beta measures sensitivity – how much a portfolio zigs when the market zags. A beta of 1.2 means you’ll move 20% more than the market, for better or worse.
Then there’s tracking error – the distance between your returns and a benchmark. To some managers, that deviation is the risk; to others, it’s the opportunity. It’s the difference between coloring inside the lines and painting something original.
But not all risk shows up on charts.
Liquidity risk is realizing you can’t sell what you own when you need to. Think of it as a crowded theater, everyone’s happy until someone yells “fire,” and then suddenly the exits look very small.
Concentration risk is the opposite, having too much faith in one bet. It’s the “all eggs, one basket” problem dressed up in a tailored suit.
For investment managers, risk is the architecture of uncertainty, something to model, budget, and rebalance. But for clients, it’s the soundtrack of their financial lives. Numbers don’t tell the whole story when emotions hold the pen.
The Human Version of Risk
Most clients aren’t afraid of volatility. They’re afraid of uncertainty.
At its core, risk for a client is the possibility that the plan doesn’t work. It’s not about beating the S&P 500 - it’s about retiring when you said you would, helping your kids through school, or keeping the cottage that holds generations of memories.
When we run Monte Carlo simulations, the 85% “probability of success” isn’t a math score, it’s a life score. It’s how likely you are to live your plan without major compromise.
In that sense, risk isn’t volatility - it’s vulnerability.
Markets are unpredictable, but human reactions are remarkably consistent. We feel twice the pain from a loss as we feel pleasure from a gain. That’s behavioral risk, the instinct to sell low, buy high, or freeze when action is required. During the 2020 market drop, portfolios fell sharply, but most recovered. Investors who sold in panic locked in losses that never healed. Markets bounced back in months; emotions took longer.
Advisors spend half their time managing portfolios, and the other half managing the people who own them. Both matter equally, perhaps the latter a bit more.
Time changes everything. For a 30-year-old, a bear market is a sale. For a retiree, it’s a threat. That’s why liquidity, the ability to draw income without selling depressed assets, is a cornerstone of planning. We often say volatility is temporary unless you need the money now. That’s why aligning time horizons to cash flows is the difference between enduring a storm and being stranded in one.
Some risks whisper. Inflation quietly eats away at purchasing power. And the cost of being too conservative - like holding excess cash - can quietly erode future wealth. Safety, in excess, becomes its own kind of risk.
Bridging the Two Worlds
At Westmount Wealth Management, we translate market risk into human terms. Risk management isn’t about eliminating uncertainty; it’s about building resilience around it.
We do this by:
Diversifying across behaviors, not just asset classes, because different assets shine in different weather.
Structuring cash flows intentionally, so short-term needs are insulated from market storms.
Guiding clients through emotions, keeping decisions grounded when headlines aren’t.
Reframing risk in terms of goals, not graphs, by focusing on life outcomes, not quarterly ones.
In short, we make risk something you can live with, not something you have to fear.
Why This All Matters
For portfolio managers, risk is a set of coordinates on a chart. For clients, it’s a feeling in the gut when the chart turns red. True wealth management lives at the intersection, where analysis meets empathy, and numbers meet meaning.
Because at the end of the day, the goal isn’t to avoid risk - it’s to understand it, harness it, and make sure it’s the right kind of risk for the life you actually want.
That’s what we do at Westmount: turn market motion into personal progress - one plan, one person, one calm steady hand on the wheel at a time.
Risk isn’t something to fear, it’s something to understand. Partner with Westmount Wealth to align your investments with your life goals, not just market metrics. Together, we’ll turn data into direction and uncertainty into opportunity.
This information has been prepared by Damir Alnsour, MBA, CFA, CFP®, FCSI® who is Head of Portfolio Management, Portfolio Manager, Financial Planner for Westmount Wealth Management Inc. Westmount Wealth Management Inc. is registered as a Portfolio Manager in British Columbia, Alberta, and Ontario. Westmount Wealth Planning Inc. is a subsidiary of Westmount Wealth Management Inc.
This material is distributed for informational purposes only and is not intended to provide personalized legal, accounting, tax, or specific investment advice. Please speak to a Westmount Wealth Advisor regarding your unique situation.
