(The following is an excerpt from a recent article appearing in InvestmentNews.)

Investors are assuming too much risk in their portfolios, according to a Vanguard analysis of data from Morningstar. The questions are: Who is responsible, and what can be done about it?

As reported in last week’s InvestmentNews, the proportion of individual investor assets in equities is exceptionally high, approaching levels not seen since the market peaks of 1999 and 2007.

In a number of cases, there’s no doubt that investors have raised their equity exposures to unusual levels in an effort to offset what they perceive to be unacceptably low returns in bonds, and concerns that the inevitable rise in long-term rates will produce bond portfolio losses.

Some might have pressured their investment advisers to increase that exposure for the same reasons.

In still other cases, advisers might have taken it upon themselves to boost stock holdings in an attempt to meet client goals — buying dividend stocks that produced higher yields than many bonds.

As senior columnist Jeff Benjamin wrote in last week’s issue, any portfolio that earned a return equal to the S&P 500’s return was assuming too much risk. A diversified portfolio in stocks and bonds should have returned less than 5%.

To a great extent, investors have been put in this position by The Fed’s policies. Its quantitative easing has helped push interest rates on bonds of all kinds to near-historic lows. That made a diversified portfolio of stocks and bonds seem unaffordable, because the bond portion was not producing the returns expected.

Unfortunately, investors have increased their equity exposure as the stock market has reached near-record highs and produced double-digit returns in five of the past six years — including 13.7% in the S&P 500 last year.

Though there have been mild corrections during the up years, the quick recovery of stock prices appears to have convinced many investors that bond portfolios contain greater dangers than stock portfolios.

Five years of double-digit returns may have led many investors to forget the pain they felt when the stock market plunged almost 40% in 2008, in the middle of the recession, and to once again miscalculate their risk tolerance.

To their dismay, many investors discovered then that their risk tolerance was far greater in rising markets than in falling ones. Unfortunately, no one can consistently and accurately predict when the market is going to begin falling.

The task for investment advisers now is to remind clients who might be urging greater equity positions in their portfolios how they felt when the market began to plunge in 2008, how they suddenly wanted to get out of stocks at almost any cost.

Advisers must point out to clients once again that stocks don’t always produce positive returns, that the market can become overvalued as a result of investor exuberance.

A correction could be triggered by any number of events — be it when the economy slows, earnings disappoint or the Fed finally manages to raise long-term interest rates.

They must also urge clients to adjust their goals if those goals are driving them to demand risky equity allocations.

Part of the solution might also lie in reminding clients that when they hear the S&P 500 returned 13.7% in 2014, only a portfolio that is 100% indexed to the S&P 500 stocks will achieve that return; only higher-risk equity portfolios will exceed it.

Investors trying to match or beat that return must be willing to accept greater risk.

Those who want some downside protection, who want insulation from the likely short-run corrections in the market, will have to accept lower returns.

It is time for advisers with clients whose portfolios are near a peak in equity holdings, or who want to increase their equity holdings, to say: “Not so fast. Let’s review the investment goals, consider the likely stock and bond market scenarios, and carefully plan the next move.”