A retiree has a $1,000,000 portfolio invested in a single 10-year Government of Canada bond yielding 2.5%. He has a "Low" risk tolerance but needs $40,000 per year for living expenses. How should the Registered Representative diagnose this situation?

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The diagnosis identifies a shortfall risk. At a 4% withdrawal rate ($40,000), a $1,000,000 portfolio yielding 2.5% ($25,000) will be depleted as the client is forced to sell principal.

A retiree has a $1,000,000 portfolio invested in a single 10-year Government of Canada bond yielding 2.5%. He has a "Low" risk tolerance but needs $40,000 per year for living expenses. How should the Registered Representative diagnose this situation?

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