When comparing portfolio strategies, it’s easy for advisors to pick when one is significantly more risky than the other. But what’s the best way to proceed when they are equally risky?
Leading risk tolerance software firm Riskalyze introduced on Oct. 18 what it says is a new metric for advisors confronted by this challenge.
Dubbed the Riskalyze GPA, the metric measures the efficiency of a client's portfolio. It will allow advisors to show clients how one portfolio might be preferable over another, even if they share an identical risk number.
“We all know that there are some investments out there that do a better job of rewarding risk, and GPA illustrates that,” Mike McDaniel, chief investment officer at the financial services company, said at the Fearless Investing Summit in San Antonio, Texas.
The release, timed to coincide with Riskalyze's annual conference, is the the second metric released by Riskalyze, which claimed
Riskalyze's additional feature will help it stay ahead of an evolving market featuring offerings from startups and incumbents alike. Risk tolerance software competitor FinaMetrica, which became part of PanPlus in 2017, launched Suitability Pro last month, which provides advisors with a risk profile map on chosen portfolios, according to the firm.
At the Riskalyze conference, CEO Aaron Klein also announced the release of three new features.
The firm has launched a tool it calls “multiple opinions,” that helps advisors see where a couple, or even a committee, have unique risk preferences, and helps evaluate how to justify them.
“Say I’m working with an investment committee for a nonprofit endowment,” Dan Cunningham, vice president of product, said at the conference. “This is a really powerful way to get 10 people on the same page.”
A new client profile allows advisors to see high-level metrics of the current portfolio side-by-side with a new, proposed one, in order to easily compare, according to Cunningham.
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“In addition to the risk number, [you] can now compare potential returns, risk ratios, dividends and an asset class summary,” he said.
In December, a new tool will be available for premier customers. Advisors will be able to add events, such as sending a kid to college, buying a house or taking Social Security. The changes will adjust in the retirement map calculation, to see how the events would have an impact on the client’s goals.
Additionally, the fintech company updated its user interface to better utilize screen real estate as well as launching a mobile app. Advisors will be able to respond to new leads, access client data and approve autopilot trades on their mobile device, among other features, according to the firm.
All the features — except the timeline for the retirement map — are now available for Riskalyze’s 22,000 users at their current monthly price plans, according to the firm. The timeline tool will be available for premier users in December.
