Understanding the Risk Comfort score
What does Risk Comfort score mean?
Risk Comfort scores measure the utility (read: satisfaction) clients get from each of the investment options your firm offers. It is measured on a scale of 0% to 100%, where 100% represents a perfect alignment of their risk preferences and the investment option, and 0% represents a complete misalignment (e.g., a very aggressive risk taker could receive a 0% Risk Comfort score for the most conservative risk level offered).
Read more about how we incorporate your model portfolios.
What information goes into a Risk Comfort score?
We use your expected return and expected volatility estimates to create your efficient frontier. We then overlay the client’s risk preferences which are made up of their Attitude to Risk and Sensitivity to Loss scores. Timeframe Aware Mapping is also factored in, so the timeframe of the client’s goal shapes the client’s Risk Comfort alongside their preferences.
Risk Comfort scores are always tied to a specific goal. Where a goal hasn't already been set up by the adviser or client, the client is instead asked to enter their expected investment timeframe during the Risk Activity. Clients with multiple goals receive a separate set of scores for each.
How should you interpret Risk Comfort scores?
The scores reveal how comfortable the client would be across each investment option. As seen in the table view below, the client has their highest Risk Comfort score for their retirement goal (98%) in the Aggressive investment option, with decreasing levels of comfort as the client takes more or less risk.
Although the client’s highest Risk Comfort score is in the Aggressive option, their goals and constraints should also be considered when recommending a portfolio. We leave it up to your expertise as the client’s adviser to discuss what investment choice makes the most sense.
What is Comfort Zone?
The Comfort Zone is designed to help illustrate to your clients where they have high levels of Risk Comfort. A portfolio is in your comfort zone if its growth asset allocation is close to your highest comfort point.
Clients will usually have 2-3 portfolios in their Comfort Zone.
It is up to your judgement what investment options are suitable or not suitable for your client, based on their comfort with risk, financial goals, and constraints.
The Risk Comfort scores and Comfort Zone present an opportunity for you to demonstrate to your clients that you deeply understand their risk preferences and help clients identify the best investment options for them.
How does Timeframe Aware Mapping work?
Risk Comfort considers a client's measured risk preferences, and the timeframe of their goal.
This means scores reflect not just how much risk a client is comfortable taking, but how much time they have to recover from market downturns.
The guiding principle is simple: the longer the timeframe, the more growth exposure a client's comfort zone can support. As a goal date approaches, comfort shifts toward more conservative allocations, in line with industry-standard investment timeframes, and this de-risking happens more quickly for goals where the full balance will be withdrawn. Within that framework, clients with stronger risk appetites sit on higher-growth paths and more conservative clients on lower ones, with profiles updated as preferences change over time.
The rate of de-risking differs depending on pre-retirement, in-retirement, and non-retirement goals.
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