Pack up the car — a client’s investment journey can be a long one, and they’re sure to hit more than a few bumps in the road. When it comes to the route, you know there are multiple ways to get there. When it comes to planning, there are many mission-critical decisions that need to be made along the way.
With all the resources available to the modern financial professional, there’s been talk about the role of technology in charting the path. We want to make our thoughts on the matter abundantly clear.
So, who is at the wheel?
Risk tolerance is not in the driver’s seat.
Risk alignment is about a triangulation of data points, and risk tolerance is just one of them. When it comes to approaching a client’s stomach for risk, all advisors approach it differently. Sure, a risk assessment built on a Nobel Prize-winning academic framework is certainly a great way to arrive at the right risk target for a portfolio, but assessments aren’t the only thing we do—in fact, they aren’t even our most-used feature.
Riskalyze provides advisors with solutions for engaging clients, analyzing investments, managing portfolios, automating trading, and more. Advisors use Riskalyze more often to dive deep into portfolio analytics than anything else.
A risk assessment is a great piece to include in a conversation about risk, but not all advisors choose to use risk assessments. There are other ways to arrive at a portfolio’s target, and in-depth portfolio analytics can help an advisor know that they’ve got clients invested right.
This is why it’s easy for an advisor to set their own risk target in Riskalyze.
You likely have clients you already know quite well, who aren’t detail oriented or who have the mindset that they hired you to take all the “work” out of managing their money. These are the clients you may set a risk target for. Whether it’s questionnaire based or advisor-set, risk tolerance isn’t in the driver’s seat.
Your clients are not in the driver’s seat.
Have you ever had a client who doesn’t want to take on any risk, but wants to retire early and live like a king?
That’s when it’s time to explain that they can’t make it from New York to Los Angeles in six hours if they’re afraid to fly. They might need to buckle up and get on that airplane anyway. Now it’s your job to make sure they have an intuitive understanding of the risk in their plan, so they aren’t taken by surprise if things get choppy.
Your clients don’t project a concrete Risk Number upon you and force you to stick to it. It’s their journey, and they need to buy into it, but they’re not in the driver’s seat.
Your software is not in the driver’s seat.
Is Riskalyze just a paint-by-numbers advice solution? Are client engagement tools and portfolio analytics really just magic eight-balls whose rudimentary output is the exclusive key to a client’s best interests?
Not at all.
Riskalyze is designed to fade into the background and let the brilliance of the advisor's work shine through. It gives great advisors the tools by which to make the right decisions. It won't embarrass you. It won’t force your hand. It’s not in the driver’s seat.
And if you’re in the driver’s seat, you can think about Riskalyze as a variety of GPS coordinates that, when combined, can get your clients where they need to go faster and more safely.
We view those “GPS coordinates” as the components that provide you with a wholistic view of a client’s risk. These include:
- Risk Tolerance: If you choose to use questionnaires, use the industry-leading assessments in Riskalyze that lean into real dollar amounts and visuals that just make sense. Eliminate the subjective risk semantics that have made risk questionnaires and risk tolerance totally useless – like "aggressive" and "moderately conservative" – and instead pinpoint risk objectively with a common language your client understands.
- Portfolio Risk: A portfolio-wide Risk Number and 95% Probability Range enable you to easily demonstrate how your strategy aligns with how your clients should be invested. When you have Heatmaps, Stress Tests, Market Scenarios, a whole suite of Detailed Portfolio Stats, and Riskalyze GPA™ for risk/return efficiency, you know you’ve got the right data points at your fingertips for all your investment due diligence.
- Risk Capacity: The alignment of risk tolerance and portfolio risk only goes so far if the investor doesn't have what they need to reach their goals. Using engaging visuals like Retirement Maps, you can illustrate the bigger picture for clients to better communicate your strategy, and even take outside assets into consideration.
- Market Sentiment: Tools like Check-ins help you stay in front of your clients and respond appropriately based on how they’re feeling about the markets. Stay connected so you can swoop in and save the day.
You know your clients better than any questionnaire ever could, and we honor the unequivocal value of that one-on-one relationship.
We also know that for the tens of thousands of advisors who use Riskalyze today, the objective client risk data (rooted in Nobel Prize-winning research) has been instrumental in helping them justify their financial approach to clients and win over prospects. It’s also helped advisors expand their own research capabilities so they can make more diverse, personalized decisions on behalf of their clients.
The fact is, when clients understand why and how they’re invested, they’ll stay invested in the long run.
Riskalyze was created with the intention of helping advisors like you shine, and we’re extremely proud of the fearless investing movement so many have already joined.
"A great advisor is like Tony Stark. We’re just the Iron Man suit, and we’re proud to play a small role in their success." – Aaron Klein, CEO at Riskalyze
Ready to learn more? Take a guided tour of Riskalyze.