Riskalyze’s proven tools will help you have more meaningful conversations with your clients based on their underlying risk metrics, helping them visualize and understand what you’ve been telling them for years. Using a Risk Target or Risk Questionnaire to capture a Risk Number® can precisely measure the appetite and capacity for risk that each of your clients has and demonstrate their alignment, or need for alignment, with the portfolios you’ve so carefully built for them.
1. First, you'll need to create a client profile if you haven't already done so:
2. Next, click Risk Number just above Create Portfolio and you'll be presented with the options to Set a Risk Target or Send a Questionnaire:
Options for Sending a Questionnaire
Upon choosing to Send a Questionnaire, you'll be given the option to choose between sending a Next-Gen Risk Assessment or sending one of our legacy options - the Simple and Detailed Questionnaire. You'll also see optional fields for Client Name, What is the Purpose of this Assessment, and Investment Amount. Filling in these fields will let you customize how the questionnaire appears to your client.
- Client Name: If you’re working with a household (Wayne and Dianne Diaz, for example) you have the option to define a more specific “Client Name” for the questionnaire (Wayne OR Dianne). Whatever you type here, will be used to greet the client on the first slide of the questionnaire you create. If you don’t define a client name for the questionnaire, we’ll still greet the client on the first slide of the questionnaire, with the name saved for them within Riskalyze.
- Purpose: The purpose field provides you with additional flexibility when assessing a client’s Risk Number®. Whether you’re aiming to address risk tolerance at a more general goal-level, or you want to capture one per account type, defining a “Purpose” for a questionnaire allows you to define the investments a given questionnaire pertains to. Anything defined in this field will be pushed to the welcome slide of the questionnaire.
- Investment Amount: As always, you can pre-fill the investment amount for a questionnaire prior to sending or launching it.
Once you've selected which questionnaire you'd like to send, it is time to choose how you'll send it. There are three ways you can send a questionnaire to a client.
- Share Link: Generate a link to the questionnaire that you can copy and paste into an email to the investor. This is a great option if you want to use your own customized email template, or to include the questionnaire link along with other notes to the client - such as a meeting invitation.
- Email: Send a formatted email directly from Riskalyze to the client (and a copy to yourself), or choose to send it just to yourself so you can add a few personal touches before forwarding it on to the client.
- Launch Now: Choose this option if you're completing the questionnaire in person with the client. This allows advisors to walk investors through the questionnaire and offer value along the way. Many advisors provide this service as a benefit to a fee-based relationship, while others charge a consulting fee.
Pro Tip: Use Launch Now to have the questionnaire open and ready on a laptop or iPad for when your client arrives at the office.
Additional Note: When generating a link for your client via the Share Link or Email options listed above, the link will remain valid for two weeks. For security purposes, after two weeks, if your client or prospect has not taken action, the link will expire, and you will need to repeat the process.
Risk Number Approaches
Set a Risk Target
We developed Risk Targets for clients you already know quite well or for advisors that prefer to start their process with goals, portfolio analysis or financial planning. Simply select the Risk Target that is most aligned with the account or portfolio objective. When you set a Risk Target, you’ll see a set of preset ranges, or you can click Set Manually and pick the exact Risk Number you prefer.
Use a Questionnaire
Riskalyze offers three distinct risk questionnaire approaches. Each begins by collecting some basic customer information, then proceeds to assess an investor’s risk preference.
Next-Gen Risk Assessment
The Next-Gen Risk Assessment is the result of thousands of hours of research, marrying mathematical sophistication with an elegant user experience that helps investors truly understand the contextual relationships between investment risk and reward - allowing you to showcase the rigor of your process without sacrificing usability.
The Next-Gen Risk Assessment coaches and educates the investor, introducing them to core Riskalyze concepts like the 95% Probability Range from the very first step. They’ll begin by focusing on the next six months, and selecting an initial risk and reward “comfort zone”.
Riskalyze immediately puts this selection to the test by presenting them with a large-loss scenario within the bounds of that initial comfort zone. From there, an investor will be presented with a series of risk/reward scenarios, choosing between investing within their comfort zone or accepting a certain outcome.
After being presented with our calculated result, investors have the option to adjust their final Risk Number up or down, before finally confirming their final Risk Number.
Legacy Simple Questionnaire
Our simple approach is ideal for getting clients who don’t prefer to think in great detail bought into the concept of risk/reward tradeoffs. Don’t let the name fool you, though. The simple questionnaire is built on the knowledge and data we gained from tens of thousands of completed risk questionnaires.
The simple approach begins by collecting and initial risk preference by asking the investor to select the downside risk level they would accept for a given level of upside potential. Riskalyze will then ask 2-3 confirming questions testing whether the investor would lean towards more return or less risk if all things were equal.
After the confirming questions, the investor is presented with their Risk Number. As with all Riskalyze questionnaire approaches, the client has "buy-in" to the solution. Based on real dollar amounts, they’ll be asked to determine if the results fit their comfort level and confirm the result.
Legacy Detailed Questionnaire
The detailed questionnaire is highly analytical and a great way to quantify the risk tolerance of more analytically inclined investors.
It asks the investor their devastation amount. The investment and devastation amounts are the foundational basis for the resulting risk/reward questions.
The risk/reward questions help the investor teach Riskalyze when they would prefer a certain outcome over a 50/50 risk (equivalent to a coin toss). Questions are presented dynamically - each based on the results from all prior questions. The number of questions typically ranges from 7-12 but can be as many as 15. Each answered question helps Riskalyze pinpoint where the investor is on the risk curve.
At the end of the questionnaire, the client reviews their Risk Number and comfort zone and approves it to use in their investment discussions with their advisor.
Got any questions? Check out our Best Practices article for how to best take advantage of the Riskalyze questionnaires in your practice.