Risk Tolerance Module Details

What is it?

Many of the financial decisions your clients make, including how they invest their money, should factor in risk. Savology's Risk Tolerance Module takes users through a series of questions related to their finances and risk preferences. It has been designed to help your clients understand, evaluate, and align their individual comfort level as it relates to financial decisions. The module accomplishes this by:

Measuring risk capacity and time horizon
Evaluating risk tolerance and potential variance
Providing a personalized, blended risk score

What's the user experience?

Clients will answer a series of questions covering items such as Primary Financial Goals, Investment Goals & Strategy, Expected Outcomes and Timelines, Risk Aversion, and Retirement Goals. Beyond basic financial questions, users will also be faced with real-world scenarios to help gauge their comfort levels and reactions to fluctations in their personal lives and market.

Upon completion of the risk tolerance module, your clients are presented with a series of results including a blended Risk Score, Portfolio Comfort Range, Risk Capacity, Risk Tolerance, Financial Goals & Timeline, and a Confidence Interval.

Risk Score: The risk score is a calculated number from 0-100 that indicates the client's overall ability and willingness to take on risk in exchange for potential investment returns to support their financial goals. The Risk Score provided is a blend of both the Risk Capacity and Risk Tolerance scores assigned.

Risk Capacity: Risk capacity is a quantative measure of how much risk an individual can afford to take without jeopardizing their financial stability or other objectives given their current financial situation. Risk capacity factors in such areas as net worth, investable assets, income, emergency savings, time horizon, and financial duress scores to provide a Risk Capacity rating from 0 to 100.

Risk Tolerance: Risk tolerance is a person's level of comfort with the possibility of losing money or their account balance decreasing over time. It can also be described the degree of risk or uncertainty that an individual is willing to endure. Risk tolerance is calculated, weighted, and adjusted based on client responses to a variety of fincial scenarios and decision making process'.

Portfolio Comfort Range: Users will be provided an estimated range of potential financial returns based on their risk tolerance and capacity scores. The range provided estimates the portfolio comfort tolerances for their particular risk score. For example, the comfort range for an aggressive risk score compares average annual returns (8.0%) to worst-year downside (-22.66%) and best-year upside (24.33%) performance.

Time Horizon & Goals: Time Horizons are represented from Immediate to Very Long based on when principal and returns may be accessed. The financial goals and investment goals are also identified to be factored into financial or investment decisions.

Confidence Interval: A confidence interval conveys how reliable the risk scoring is. This factors in variance and consistency of responses and appropriateness of results based on the inputs. A random set of survey responses or a confused user could result in low confidence or high variance.

What's the advisor experience?

If your clients have completed the Risk Tolerance Module, advisors can access a more detailed summary of their responses and results to review or print.

Navigate to User Admin > Users where you will see a full list of your active users.
Search for the individual in the table using the search bar by name or email address, or use the drop-down menu to filter users by group.
Once you’ve found the desired user, either click on their name or email address to visit the user details page to see their plan and information.
From here, select the Engagement Tab > View Modules then scroll down to the users Risk Tolerance Module, which should show a check mark, date of completion, and view icon.
Upon selecting the View Icon, advisors will be taken to a printable PDF summary of their selected users completed module. This will show an identical summary page to the user, plus the user's overall financial summary, as well as a list view of the prompts and the user's responses to each question.

How to engage with clients?

Advisors may choose to engage their clients in a number of different ways. When reviewing with clients, you'll want to focus on driving engagement and helping the client understand how this affects them and why they should care. Be sure to remind them their risk tolerance level will affect their entire portfolio including investments. It may also be good to explain to users why the Risk Tolerance Module is important for both of you when making financial decisions.

Highlight/Recommend the Risk Tolerance Module to a client

Advisors can highlight the Risk Tolerance Module for clients, which which notify your users of the recommended module and help them focus on and complete it first. Here's how:

In your admin account, navigate to User Admin > Users where you will see a full list of active users.
Search for and find the client in the active user table and either click on their name or email address to view their plan and account details.
Click on the Engagement tab, where you can review and highlight different Action Items, Modules, or Literacy Courses.
Select one of the menu buttons to visit a particular section, or scroll down the page to visit the appropriate section.
In the list of Action Items, Modules, or Literacy Courses, select the bookmark icon next to the action or tool you want to highlight*.
In the confirmation modal that appears, select Recommend to highlight the Risk Tolerance Module.

*Note: Modules that have already been completed will show a View Icon as opposed to the Highlight Icon

See How to Highlight Items for Clients

How to Print or Save as a PDF

You can print or save a copy of your client's risk tolerance module to present in-person or digitally.

In your admin account, navigate to User Admin > Users where you will see a full list of active users.
Search for and find the client in the active user table and either click on their name or email address to view their plan and account details.
Click on the Engagement tab, from there navigate to Modules.
In the list of Modules, select the eyeball icon next to the Risk Tolerance Module.
This will open a browser window containing the Risk Tolerance Module results of your client in PDF form.
From here, select the Print icon to save a PDF, or create a physical copy to review with your client.

How to Print a Client's Financial Plan