How does Riskalyze determine my Risk number?
Riskalyze helps advisors quantify their clients' risk tolerance by using scientific theory to determine their Risk Number. Can you tell us more about how you do this? Riskalyze's process is built upon a Nobel Prize-winning framework.
How can Riskalyze help financial advisors measure risk tolerance?
We sat down with Riskalyze co-founder and chief investment officer Mike McDaniel to learn more about how they approach risk tolerance and what this new approach can do for financial advisors. Riskalyze helps advisors quantify their clients' risk tolerance by using scientific theory to determine their Risk Number.
What is the risk number and why does it matter?
Today, we’ll discuss the component most central to your client’s success— the Risk Number. The Risk Number ® is an objective, quantitative measurement of an investor’s true risk tolerance and the risk in a portfolio.
What happens once an advisor determines an investor’s risk number?
Once an advisor has determined an investor’s Risk Number, they can choose one of our Risk Number model portfolios to match, import one of their own model portfolios, or build a unique strategy for the client.
Portfolio-Level Analytics
Along the right-hand margin of a portfolio, you'll find that portfolio's Risk Number ®, six-month 95% Historical Range, Riskalyze GPA ®, Potential Annual Return, and its aggregate Annual Dividend and Expense Ratio.
Individual Account Analytics
All of the aggregate analytics available at the portfolio level are accessible for each account in the portfolio. To view these, click on the views menu on the top-left of an account (directly under the account name) and select Analytics.
Muting Accounts
Muting accounts can be a quick and easy way of viewing aggregated analytics for particular groups of accounts within a portfolio without deleting accounts or managing separate portfolios.
Individual Holdings
If you notice indicators next to the name of a particular allocation, it will mean one of the following regarding that position within a portfolio:
Who created Riskalyze?
It was founded by Aaron Klein, Michael McDaniel and Matt Pistone, who shared a common vision regarding the application of risk analysis . Headquartered in Auburn, California, it gained popularity with advisors who have found the single number system and easy and effective way to market products and craft client profiles. have in the past struggled to quantify risk as a way to market products or services. 1
What is risk number?
Patented Risk Number technology harnesses a computational platform that won the Nobel Prize for Economics in 2002. 2 Advisors can use the numbers generated by this program to craft portfolios that contain exactly the right amount of risk. They can also use it to show clients that they may be taking more risk in their current portfolios than they realize.
What is Riskalyze program?
In addition to quantifying risk into a single number, the Riskalyze program also allows advisors to perform stress tests on a portfolio using a wide range of scenarios, such as a market crash or jump in interest rates.The stress testing tool allows clients to see where they are vulnerable in their portfolios and how they can mitigate these risks. The program's portfolio mapping module gives advisors a way to project with 95% accuracy whether a given client's portfolio will achieve the returns that the client wants. These unique tools brought significant investment interest into the company from outside sources, which amounts steadily increasing from their launch to their most recent funding round in late 2016. 4 (For more, see: Riskalyze Gets $20M Funding to Improve Advisor Tech .)
What is Riskalyze questionnaire?
Riskalyze offers a risk questionnaire. Once it is submitted, the advisor will input their client's investment choices directly into the program. Advisors find the program exceptionally useful when compiling complex data, as a single number is easier to sell than theoretical risk profiling. It is for this reason that the company found notable success in the investment advisor field.
Is MoneyGuidePro integrated with Riskalyze?
In November of 2016, PIEtech announced that it is integrating its MoneyGuidePro financial planning software with Riskalyze. The integration allows users of either program to launch one system from the other. 5 “By coupling the Riskalyze near-term time horizon risk profiling tools with MoneyGuidePro’s holistic long-term risk profiling approach, advisors will be better able to evaluate a client’s current risk exposure and true risk capacity,” Kevin Knull, president of PIEtech, said in a statement. (For more, see: How Technology Is Changing Financial Advice .)
Is Riskalyze a RIA?
It is for this reason that the company found notable success in the investment advisor field. Riskalyze markets its products to Registered Investment Advisors (RIAs), independent broker-dealers, hybrid advisors, RIA networks, plan and account custodians, clearing firms and asset managers as well as local banks.
What is risk number?
The Risk Number ® is an objective, quantitative measurement of an investor’s true risk tolerance and the risk in a portfolio. Our patented technology calculates a "risk score" on a scale from 1-99, utilizing a scientific framework that won the Nobel Prize for Economics. As you can see, we've shaped it like a speed limit sign, so a higher Risk Number means a higher level of risk and potential return.
How to determine a client's risk number?
To determine a client’s Risk Number, advisors either use Riskalyze's risk assessment, or they simply set a risk target if they already know the client well. Once an advisor has determined an investor’s Risk Number, they can choose one of our Risk Number model portfolios to match, import one of their own model portfolios, or build a unique strategy for the client. By building a portfolio whose aggregate downside risk potential aligns with the client’s risk tolerance, an advisor can set clear expectations and serve as a behavioral coach during market volatility.
Why is the speed limit metaphor important?
The speed limit metaphor helps instill an understanding of that risk. Sometimes it's prudent to slow down depending on weather conditions—the same is true of risk. Much of the impetus of Riskalyze is centered in these questions to articulate a simple, objective measure for investors and advisors to deepen communication.
Does risk tolerance work?
We know that generalizing client risk tolerance doesn't work. Investors view risk through their own, unique lens to gauge risk and return tradeoffs. The speed limit metaphor helps instill an understanding of that risk. Sometimes it's prudent to slow down depending on weather conditions—the same is true of risk.
Can you book a demo of Riskalyze?
If you're looking to drive better alignment between your clients and their portfolios (and eliminate a lot of manual work and speculation in the process), you can book a demo of Riskalyze today. Our product experts will walk you through exactly how our platform will boost your productivity, protect your valuation, attract new clients, and help them understand how you're looking out for their best interests.
Portfolio-Level Analytics
Individual Account Analytics
Muting Accounts
Individual Holdings