Client Suitability Allocation Dial
Adjust risk, tax treatment, and income as each client's needs change
- Difficulty
- Advanced
- Time to result
- ~weeks to results
- Steps
- 5
- Confidence
- 90%
Navellier describes suitability as an ongoing allocation process rather than a one-time questionnaire. The manager first listens to what the client wants, then builds a mix across conservative, moderately aggressive, and aggressive stocks. As market volatility rises, the aggressive sleeves are trimmed or sold. The account wrapper changes implementation: a pension can pursue more A-rated stocks, while a tax-sensitive account may use A- and B-rated holdings or a growing mutual fund. Dividend management is blended with growth exposure because the styles move differently, and the mix shifts toward income as a client gets older. The mechanism links personal objectives, risk sleeves, market conditions, account tax treatment, diversification behavior, and life stage. It must be revisited whenever the client's needs change rather than forcing every person into the same standard allocation.
Origin
Navellier explains the process while discussing an SEC and Department of Labor audit of his private-client suitability practices.
Core principles
- 01A portfolio mix should fit the person rather than a generic model client.
- 02Risk exposure should fall when market volatility rises.
- 03Account tax treatment changes which rated stocks and funds are appropriate.
- 04Dividend exposure can smooth growth exposure and support rising income needs.
- 05Suitability must be revisited as client circumstances change.
How to run it
- 1
Listen for suitability
Identify the client's goals, tax status, income needs, risk tolerance, and changing circumstances. Use those facts to define the portfolio's required behavior.
Pro tip Reconfirm needs after major life or account changes rather than relying on the original profile.
Watch out Do not force a client into a standard slot without listening to what they want.
- 2
Set risk sleeves
Allocate among conservative, moderately aggressive, and aggressive holdings. Navellier describes a base of six conservative stocks with smaller moderately aggressive and aggressive allocations.
Pro tip Make each sleeve's purpose explicit before choosing its holdings.
Watch out The allocation labels do not replace security-level risk analysis.
- 3
Respond to volatility
When holdings or markets become more volatile, trim the higher-risk sleeves or sell them outright. Preserve the client's intended risk experience rather than holding the initial mix mechanically.
Pro tip Define the evidence that triggers a trim before volatility spikes.
Watch out Clients following a newsletter may forget the risk-control step that accompanies the picks.
- 4
Fit the account
Choose holdings and vehicles according to the account's tax treatment. Distinguish pension assets from taxable assets and high-tax-state constraints.
Pro tip Evaluate after-tax compounding rather than headline return alone.
Watch out The same security mix can produce different client outcomes in different account wrappers.
- 5
Blend growth and income
Combine dividend management with growth exposure so the components can offset each other's movements. Increase income emphasis as the client's needs evolve.
Pro tip Use dividend growth rather than yield alone when quality and future income matter.
Watch out A static growth-heavy portfolio may become unsuitable as the client ages.
In the wild
Navellier says a pension account may chase more A-rated stocks, while a tax-efficient account may hold A- and B-rated stocks or use a growing fund. Both still blend dividend management with growth holdings, and the mix can shift toward income as the client ages.
→ The portfolio implementation reflects account taxes, risk, and the client's evolving income needs.
Common mistakes
Using one client template
Different goals, taxes, and life stages require different mixes even when the same research process supplies the holdings.
Ignoring the trim discipline
Buying recommendations without reducing exposure as volatility rises omits a central risk-control step.
Treating taxes as an afterthought
Pension and taxable accounts can require different holdings or vehicles to achieve a suitable result.
Is it for you?
Best for
It is best for advisers managing individualized portfolios across taxable, pension, growth, and income objectives.
Not ideal for
It is not ideal as a self-contained investment strategy without a separate process for selecting and monitoring securities.
From the transcript
“You have to literally listen to people do what they want and to dial it in and change it as their needs change.”
“as things get more volatile, we start to trim or sell out right.”
“as people get older, they want more income and we can make that transition very easily.”
From the episode
Interview With Louis Navellier: Masters in Business (Audio)
Louis Navellier