Risk - The Adviser Insights

Once your client has completed the Risk Activity, you can then present their results to them.

Navigate to the client you wish to view. On the client page either click on the 'Risk' tile, or navigate to the bottom left tab 'goals and preferences'.

Here you will see a summary of their Risk preferences. To discuss results with your client, we recommend launching the 'client meeting'. This is an engaging and interactive session which helps to educate a client of their risk preferences and ultimately helps you determine the portfolio which is most comfortable for them.

Select 'client meeting' to launch this. You can present this either virtually or in person with your clients. Alternatively, you can also select 'view report' which generates a PDF Risk Document but won't include the goals planning projections as in the client meeting.

The Client Meeting will open in a new tab in your browser, landing on the following agenda screen to give an overview of the meeting. 

On clicking Begin, you will land on following page, which frames up the conversation around the client's unique preferences, constraints, and goals coming together to guide their investment strategy.

The next page looks at the risk vs. reward decisions the client made in the activity. The blue discussion panel on the righthand side is there on each screen to guide the conversation and add action items.

Next, you will look at the client's Attitude to Risk score, which measures the level of risk they are willing to take. The graph shows how they compare to other investors. 

Following that, you will look at the client's Sensitivity to Loss score, which measures how unsettled the client may become during periods of market volatility. 

Next, you will look at which investment options align with the risk preferences of the client. The purpose of this page is for you and the client to have a discussion about which investment options they would be most comfortable with from a risk-return perspective, and how that might fit with their goals. To do this, we assign a Risk Comfort score to each portfolio. 

Risk Comfort represents the utility a client gets from each investment option. Utility is an economic concept that defines how much the customer prefers a product. The utility, and the Risk Comfort scores, for each investment option depend on the particular risk preferences of the client. 

Below, we see that the client is most comfortable in the Growth option, and their Comfort Zone, indicating where they have a relatively high degree of Risk Comfort that stretches between the Conservative and High Growth options. 

You can then visualise the trade-off between risk and return in the context of the client's primary investment goal in the Goal Projector. Advisers tell us that it’s helpful to be able to present simple projections to their clients, and discuss the impacts of taking more or less risk, or adjusting their contributions.

Open Goal Projector by clicking the Launch Goal Projector button on the bottom-right-hand corner of the page.

The Goals page will show any goals which have been previously entered by the client, during their completion of the Goals Activity.

Within Goal Projector, you will enter some basic information about the client's desired wealth accumulation goal, along with the client's investment contribution and time horizon.

On pressing Update we run 10,000 Monte Carlo simulations that forecast how their investment will grow over time. Goal achievability percentages reflect the proportion of simulations where the client achieves their goal by the target date.

Once you and the client have gone through the projection tool, it's now time to select the portfolio for this goal. On the right hand side, tick the portfolio aligned to this goal. You will need to do this for each of the clients goals.

Select 'Finish' to end the experience. A pop-up will appear with the options to add any next steps or any action items, which will be recorded in the PDF report that is generated on completion.

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If not, please feel free to reach out to us at customer-support@capitalpreferences.com