The Investment > Risk > Summary tab of each client plan provides several key comparison visuals, all of which highlight the Household Risk Score.
Household Risk: The risk score that is manually set for a given client plan within the Score & Assessments tab. This score is meant to represent that client's tolerance for risk on a scale from 1 to 100.
There are 3 charts available in this tab: the Risk Summary, the Risk Comparison, and the Household Risk Classification. These can be toggled between by clicking the downward-facing arrow next to the chart name.
This chart shows the Household Risk score, in relation to the Current Portfolio risk score and a chosen Target Portfolio risk score:
Current Portfolio Risk: The risk score for that client's current portfolio. Current portfolio risk scores range from 1 to 100, and are calculated based on the standard deviation of that client's investment portfolio.
Target Portfolio Risk: The risk score for your chosen target portfolio, selected via the dropdown menu to the upper right of the chart. Target portfolio risk scores range from 1 to 100, and are calculated based on the standard deviation of that specific model portfolio.
Customizing Current Portfolio Risk
By default, the current portfolio risk score is based on all of the client's non-annuity invested assets. You can customize which assets factor into their current portfolio risk score by opening the Action Items, and then clicking Edit.
This chart shows the Household Risk score, in relation to the Current Portfolio risk score, a chosen Target Portfolio risk score, and the risk scores of three specific asset classes: money market, corporate bonds, and large growth:
Just like portfolios, the risk scores for these asset classes are calculated based on the standard deviation for each asset class.
Note on Standard Deviation:
If you have Custom Asset Classes enabled and have made adjustments to the standard deviation of these asset classes, your risk scores will be different than those shown above. Risk scores will also vary slightly depending on your selected Model Type in the Assumptions > Misc tab of your Advisor Portal.
This chart shows the Household Risk score, in relation to your advisor-specific Risk Tolerance Categories:
Risk tolerance categories are enabled and customized in the Risk > Categories tab of the Advisor Portal. If risk categories are disabled, this chart will be hidden within the client plan and will not be visible as an option.
Curious about Risk Categories?
Risk Categories are entirely optional, but provide advisors with the opportunity to align RightCapital's risk scoring system with your unique perspective on risk. To read more about risk categories, click here.
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