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Using Technology to Help Clients Understand Their Risk Tolerance
September 28, 2018
A few years ago, the Foxstone Team started using an innovative new investment technology that helps clients understand their “true” tolerance for investment risk. It’s called Riskalyze and it’s built on decades of behavioral economic work and an academic framework that won the Nobel Prize for Economics in 2002.
Finding Your Risk Number
After inputting key attributes and data about the client, their portfolio and their financial goals, the Riskalyze tool calculates a unique Risk Number (1-99) based on the investor’s unique circumstances. What makes Riskalyze so special is that once the client’s Risk Number is determined, the tool highlights what it means in terms of potential performance gains in strong market conditions and potential losses in down market conditions. It’s these hypothetical performance ranges that gets our clients talking more thoroughly about the risk levels they’d be comfortable with and gets all of us aligned about the proper risk profile for their portfolio based on their unique situation as an investor.
Aligning Your Portfolio to Your Unique Tolerance for Risk
Once our client has a more thorough understanding of risk, risk tolerance and what it means regarding investment performance ranges, the Foxstone Team uses their Risk Number as an important input in the development of an investment strategy and portfolio. In addition, the client’s Risk Number is used in the monitoring and management of the portfolio over time.
While many advisors still rely on generic risk tolerance inputs (age, investment experience and portfolio size) to categorize clients into generic risk tolerance categories like conservative, moderately-aggressive and aggressive, the Foxstone team thinks there is a better way and we have brought in a powerful tool that uses cutting-edge investment technology to do it. Our current clients are certainly glad we’re using Riskalyze and they can’t believe how much better they understand investment risk and their tolerance for it.
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About Foxstone Financial
Foxstone Financial is a Denver-based investment advisor that uses the latest artificial intelligence investment technology, decades of market experience and a network of specialized partners to serve clients that expect better than average.
Finding Your Risk Number
After inputting key attributes and data about the client, their portfolio and their financial goals, the Riskalyze tool calculates a unique Risk Number (1-99) based on the investor’s unique circumstances. What makes Riskalyze so special is that once the client’s Risk Number is determined, the tool highlights what it means in terms of potential performance gains in strong market conditions and potential losses in down market conditions. It’s these hypothetical performance ranges that gets our clients talking more thoroughly about the risk levels they’d be comfortable with and gets all of us aligned about the proper risk profile for their portfolio based on their unique situation as an investor.
Aligning Your Portfolio to Your Unique Tolerance for Risk
Once our client has a more thorough understanding of risk, risk tolerance and what it means regarding investment performance ranges, the Foxstone Team uses their Risk Number as an important input in the development of an investment strategy and portfolio. In addition, the client’s Risk Number is used in the monitoring and management of the portfolio over time.
While many advisors still rely on generic risk tolerance inputs (age, investment experience and portfolio size) to categorize clients into generic risk tolerance categories like conservative, moderately-aggressive and aggressive, the Foxstone team thinks there is a better way and we have brought in a powerful tool that uses cutting-edge investment technology to do it. Our current clients are certainly glad we’re using Riskalyze and they can’t believe how much better they understand investment risk and their tolerance for it.
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About Foxstone Financial
Foxstone Financial is a Denver-based investment advisor that uses the latest artificial intelligence investment technology, decades of market experience and a network of specialized partners to serve clients that expect better than average.