If you’ve had a chance to look at our Marketing Playbook, you may have noticed we introduced the idea that you, the advisor, play the role of the ever-present guide to your clients' success.
It is with that mission in mind, that we’ve designed Riskalyze to be visual and easy to understand for both client and advisor. As a result, we’ve heard from countless advisors how much they love incorporating Riskalyze into client meetings. So join us for the next few minutes as we train you to serve as the "Obi-Wan" to your clients' "Luke Skywalker".
IN THIS ARTICLE
Stage 1 - The Client Meeting
1. So what is this Riskalyze thing, anyway? The time has come to introduce Riskalyze to your clients. Up to this point, you've probably learned the robust capabilities of Riskalyze to reset expectations and how the 95% Historical Range can build client trust and set meaningful six-month milestones. You've seen how it sets expectations that adding risk to a portfolio is great in up markets, but we'll see the opposite in down markets.
2. Let’s dive in! With Riskalyze you’re able to act in the client’s best interest by taking into account their Wants, Has, Needs, and Should Haves. Let’s break that down visually, followed by an explanation.
- WANTS: The client tells us the advisor how much risk they want through the Risk Number. To capture a Risk Number, Riskalyze gives you two options: Risk Targets and a Risk Questionnaire. Many advisors will set a Risk Target for those clients they know really well or have a long-standing relationship. Then, in the client meeting, they'll review the 95% Historical Range to confirm the approach. Other advisors prefer to incorporate the Risk Questionnaire—either before or during the client meeting. Both are equally great approaches. If emailing the questionnaire, it's best to send the Simple Questionnaire. Then the advisor and client will review it during the meeting. Need a sample email or two? We’ve got you covered!
Riskalyze is a software we recently started using at our firm that quantifies the risk of each person. It’s pretty cool—I think you’ll like it. It’ll introduce you to this concept of the Risk Number which I think will be as much benefit to you as it has been to me. It’s grown my understanding of risk and how it’s viewed by many people. I know it can help you, too.
It shouldn’t take more than 5 minutes. Can you click on the link and answer a few questions for our meeting coming up on [DATE]? It’ll help lay the foundation for our discussion and future goals we’ll set. If you have any questions on it, don’t hesitate to ask.
“Hi Crystal and Jeremy,
You know this already, but with me being such a visual person, I’m always looking for the best way of looking at concepts like risk and return. I think I’ve found it. It’s called Riskalyze.
Riskalyze is a company that quantifies the risk tolerance of each investor in a fun and creative way (it’s also built on decades of academic research). I think you’ll find it intriguing and it only takes a few minutes.
Could you click on the link below and fill it out for our upcoming meeting? It’ll set some of the discussion points for your long-term goals and needs. Don’t worry—we’ll have plenty to discuss but it’ll help me get a better understanding of what areas we should explore.
- HAS: aka, the client's current portfolio. Examine their current portfolio either by importing a portfolio from your custodian, using an integration, entering holdings manually or using Asset Sync. Portfolio analytics help us understand the strengths and weaknesses of the portfolio. For example, could the client be affected by interest rates? Or use the Stress Tests of the portfolio. Want to see the Risk Number for each individual holding? Check out the Risk/Reward Heatmap.
- NEEDS: We all want to retire someday and that’s where Retirement Maps comes into play. Use Retirement Maps to quickly and easily demonstrate that the client is either on track, or needs to make some adjustments to meet their long-term goals. If the probability is insufficient, then it's a perfect time to introduce a proposed portfolio that is more suited to the client. A before-and-after approach can be used to show the probability of success for both the current and proposed portfolio during the client meeting. Thereby demonstrating your long-term thinking, and how that's directly linked to their goals. Advisors can also record a few Retirement Maps notes in the agenda for the meeting.
- SHOULD HAVE: “Use the Force, Luke.” This is where we can utilize the Proposed Portfolio and help guide the client’s investment choices. Want to suggest a path more in line with the client’s personal Risk Number? Consider using a Model.
Stage 2 - Recurring Client Meetings
Once you've incorporated Riskalyze into your client meetings, here are some tips and considerations to keep clients abreast of where they are at with their Risk Number.
Consider how you want to review the Risk Number during meetings. This can be done by a questionnaire periodically, during different or new life stages or by reviewing their current portfolio and 95% Historical Range for their comfort zone by asking "last year your range was _______ and that means you could lose _______. Are you still comfortable with that?" Advisors also use Stress Tests to demonstrate potential loss or Check-Ins to keep a pulse on how clients feel about current market conditions and their financial future.
Stage 3 - Closing Thoughts
Following the tips outlined above can help optimize your advisor/client relationship: Let’s recap...
- Your client has made an agreement with you to be a long term investor—how awesome is that?! They can tell you if they are not comfortable with the risk/reward tradeoff.
- You're helping to provide six-month milestones, giving your client a cool confidence and ultimately skyrocketing your credibility.
- Drives up your practice efficiency by negating panicked calls because your clients know what is normal for their portfolio.
- Gives you outstanding and easily accessible answers for the client who wonders why the market is beating their portfolio. Hint: think Stress Test!
No matter how you choose to incorporate Riskalyze into your workflow—at the end of the day, it's a fun, enjoyable way to run a client meeting and to touch on the critical areas such as getting to know your client, documenting risk and setting proper expectations.
Don’t be afraid to be your client's guide. They are putting their financial trust in your very capable hands. They’ve started the story by telling you what they want. Now continue to write an epic tale by guiding them according to what they have, should have and need. Let’s make sure their financial story ends with a... “and they lived happily ever after!”