Andes Wealth Technologies was named a finalist of the 2020 WealthManagement.com Industry Award in the Risk Tolerance and Client Profiling category, along with Riskalyze and Totum Risk.
Assessing the client’s risk tolerance is an important first step to ensure adequate investment recommendations. Our Multi-dimensional Risk Tolerance uses a combination of two approaches to get an accurate assessment of the client’s risk level:
• Our patent-pending Risk Tolerance Test uses one chart to map the client’s risk tolerance directly to one of your models.
• We also use a traditional risk questionnaire to cross-validate the result from the Risk Tolerance Test.
Risk Tolerance Test: Intuitive, Transparent, and Easy to Use
The client is presented with the upside and downside of each model in your model set, and the client chooses the one that they feel most comfortable with, and the result maps directly to one of your model. See demo video.
Our Approach Is Defensible
The traditional risk appetite questionnaire is widely considered not reliable in determining the client’s risk tolerance. However, it can play a useful supporting role to cross-validate the result from the Risk Tolerance Test. The chart below shows the results from the Risk Appetite questionnaire and the Risk Tolerance Test for Annie & Kingly Johnson.
If the results are close (see Annie Johnson above with the green box), you know you got it right. If the client has a lower risk appetite but chose a more aggressive portfolio, it warrants a deeper conversation. Perhaps the client didn’t fully understand the Risk Tolerance Test; perhaps they were tempted by the upside and didn’t fully appreciate the significance of the downside.
If the client insists on the more aggressive portfolio after the conversation, you document the conversation and you are covered.
When comparing the risk tolerance products on the market, Bob Veres gave Andes Wealth Technologies a B+ while giving Riskalyze a C. Read his article here.
Proud Member of the Wealthies Circle
Andes Wealth Technologies is a proud of member of the Wealthies Circle, a club for Wealth Management Industry Award finalists and winners.
See our Wealthies Circle profile: https://wealthiescircle.com/member/andes-wealth-technologies/
